Quick Read
-
MSTR fell 15% in October yet bought 811 more bitcoin for $65.5M and repurchased $208M in preferred shares, signaling management confidence.
-
Coinbase dropped 23% and MARA plunged 40% in October, both falling harder than MSTR despite sharing no preferred-stock funding model.
-
Saylor sees bitcoin entering a new bull market, but MSTR's leveraged structure means further crypto weakness could punish shares harder than bitcoin itself.
-
It sounds nuts, but SoFi is giving new Active Invest users up to $1,000 in stock for a limited time, and all it takes is a $50 deposit to get started. See for yourself (Sponsor)
Crypto-linked stocks sold off together in October. The largest corporate holder of Bitcoin(CRYPTO:BTC) held up better than its two closest peers. Strategy( NASDAQ:MSTR ) stock is at $133.07 in afternoon trading, up 2%. That small bounce follows a 15% decline for the stock in October.
An enterprise analytics software business still operates inside Strategy, but bitcoin is central to the company's balance sheet. The company pays for its purchases by selling common stock, convertible notes and perpetual preferred "Digital Credit" securities. This structure gives its common shares larger exposure to bitcoin's swings in both directions.
Binance Breach and New Purchases Frame Strategy's Month
Late in October, a security breach at Binance shook crypto-linked stocks. InvestorsHub reported on October 30 that hackers stole a record $6.36 billion from the exchange. Barron's argued the same day that crypto investors should still worry about the impact for Strategy and other U.S.-listed names.
Strategy said on November 2 that it bought 811 more bitcoin for $65.5 million. In the same update, it disclosed that it repurchased $208.2 million of its preferred shares. Those moves suggest management still sees room to put capital to work after the selloff.
SoFi Active Invest is offering a limited-time promotion. Open an account, fund it with $50 or more, and you could receive up to $1,000 in complimentary stock for Active Invest accounts. See for yourself by clicking here now. (Sponsor)
Coinbase and MARA Took Heavier October Losses
Both of Strategy stock's closest peers fared worse over the same stretch. Coinbase Global( NASDAQ:COIN ) stock is at $138.55 after a 23% drop in October, and it's lower again. MARA Holdings( NASDAQ:MARA ) stock is at $6.56 following a 40% plunge in October, and it's also down.
That gap matters for the Strategy debate. Sector-wide pressure may explain part of its October decline, since the exchange and the miner fell further without sharing its preferred-stock funding model. The peer group's weakness nonetheless shows how tightly all three names remain tied to crypto sentiment.
Three Different Ways to Ride the Crypto Cycle
Strategy is built to hold Bitcoin and issue securities backed by that position, with software as a secondary business. Coinbase runs a regulated exchange that makes transaction fees plus subscription and stablecoin revenue, and it's expanding into prediction markets, derivatives and equities. That mix ties Coinbase to trading activity as much as to the direction of crypto prices.
MARA mines bitcoin and is steering its power assets toward artificial intelligence (AI) and high-performance computing (HPC) data centers. In its second-quarter shareholder letter, MARA described a plan to convert much of its owned mining capacity to AI computing. Mining keeps MARA directly exposed to bitcoin's price, while the data center shift adds execution risk around leases and regulatory approvals.
Weighing Strategy Stock's Bull and Bear Cases
The bull case rests on Strategy's steady accumulation. It keeps adding bitcoin after the selloff, and its preferred buyback can be read as a sign of confidence in its funding. Executive Chairman Michael Saylor said he believes bitcoin is at the beginning of its next bull market. If bitcoin steadies, a stock that has already fallen this far could be closer to a bottom.
Leverage grounds the bear case. Phong Le spoke on a February 5 webinar. Then Strategy's CEO, he described the company as "levered and amplified Bitcoin." With bitcoin at $76,843, further crypto weakness could hit the stock harder than the coin itself.
Strategy's funding model also depends on demand for its stock and preferred shares, and that demand can fade when the shares fall. Saylor acknowledged as much on the same call. "When our equity trades weak, we don't sell it." Exchange security worries after the Binance breach could also weigh on crypto sentiment and, with it, on the company.
What Could Settle the Strategy Debate
Support for the bull side would come from a steadier bitcoin price and continued demand for Strategy's common and preferred offerings, while pressure on the bear side would build if crypto weakness deepens and the company's capital raising slows. A fresh look at both will come with the company's next earnings report.
The next test for Strategy is whether its funding engine can keep running if bitcoin stays under pressure. It could make sense for investors to stay cautious while the debate over its funding model plays out.
Want Up To $3,000 In Stock? SoFi Is Giving New Active Invest Users Complimentary Stock
Looking to grow your money but unsure where to begin? SoFi Active Invest is offering a limited-time promotion; open a new Active Invest account, fund it with $50 or more, and you could receive up to $1,000 in complimentary stock .
From $0 commission trading3 to fractional shares4 and automated investing, this app is designed to simplify investing for everyone, whether you're just starting or already experienced. Its easy to sign up and secure your bonus. (Sponsor)
Contact editorial@247wallst.com for any questions or corrections.
