Strategy enterprise mNAV falls below 1 as STRC hits record low

Strategy’s enterprise mNAV fell below 1 on Friday afternoon as its common stock extended its decline and its Stretch preferred stock hit a record low.

MSTR shares fell 3.5% on Friday and reached a yearly low near $82, adding further pressure to the company’s valuation.

Enterprise mNAV stood near 0.99, with Strategy’s enterprise value estimated at $50.3 billion against Bitcoin holdings worth roughly $50.6 billion. The company holds 847,363 BTC.

STRC, Strategy’s Variable Rate Series A Perpetual Stretch Preferred Stock, fell to about $71 before recovering to $74 at press time. The preferred stock remains well below its $100 stated amount.

Bitcoin was trading near $60,000 after repeatedly slipping below that level on Thursday and Friday, adding further pressure to Strategy’s valuation.

Strategy defines enterprise mNAV as its enterprise value divided by the market value of its Bitcoin holdings. Enterprise value includes the market value of MSTR common shares, debt, and preferred stock, minus cash.

This differs from basic mNAV, which compares Strategy’s common market capitalization with the value of its Bitcoin holdings. Diluted mNAV also accounts for potential dilution from securities that may convert into common shares.

Enterprise mNAV provides a broader view because it includes Strategy’s full capital structure. A reading below 1 means the company’s enterprise value is lower than the market value of its Bitcoin holdings.

That does not mean common shareholders have a direct claim on Bitcoin at a discount, since debt and preferred stockholders rank ahead of common equity.

The decline comes as pressure builds on STRC, one of Strategy’s main funding vehicles for Bitcoin purchases.

STRC was designed to trade near $100, with Strategy able to adjust its monthly dividend rate to support the price. The annualized dividend has already risen from 9% at launch to 11.5%.

At a price near $74, the current dividend implies an effective yield of more than 15%.

Strategy has relied heavily on STRC to raise billions of dollars for Bitcoin purchases. Trading far below par makes future issuance less efficient, while another dividend increase would raise the company’s annual payment obligations.

The simultaneous decline in MSTR, STRC, and Bitcoin is now pressuring both sides of Strategy’s funding model. A lower MSTR valuation reduces enterprise mNAV, while a deeply discounted STRC weakens one of the company’s main sources of capital.

Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.