To The Moon

MicroStrategy recently rebranded as Strategy and released its Q4 earnings report, sparking mixed reactions from investors. Here’s my take on whether it's worth buying below $300.

Why I'm Not Buying at Current Levels?

While some investors might be bullish on MSTR, I remain highly skeptical and would only consider buying if the stock price drops below $20, a level that is highly unlikely given that it closed at $325.46 yesterday.

Strategy (MSTR)

Here's why:

1. Weak Financial Performance

Looking at EPS (Earnings Per Share) and net income, MicroStrategy's financial results leave much to be desired. Consistent profitability is a key factor for me when investing in any stock, and the company's track record in this regard has not been strong.

2. Bitcoin Exposure Is Risky

MicroStrategy's decision to heavily invest in Bitcoin may be a major reason for its high stock price. However, Bitcoin is highly speculative and extremely volatile, which adds significant risk to the company’s valuation. This heavy reliance on a digital asset subject to market swings is a red flag for conservative investors like me.

3. Lack of Dividends

Another downside is the lack of dividends. Companies that pay dividends often provide a cushion during volatile market conditions, offering value even if the stock price stagnates. MicroStrategy provides no such comfort, making it less attractive from an income investment perspective.

4. Not a Core Technology Innovator

Unlike companies such as Microsoft, MicroStrategy doesn't stand out as a leader in innovation within the tech space. Its core business in business intelligence software lacks the market dominance to justify its current valuation.

5. Limited Competitive Moat

The business intelligence sector is highly competitive, with other tech giants offering more robust and scalable solutions. MicroStrategy's rebranding effort may indicate an attempt to stay relevant, but execution remains a concern.

Conclusion

Due to weak financial performance, speculative Bitcoin exposure, and lack of dividends, MicroStrategy is not on my watchlist. While I don't believe the stock will ever drop to my personal buy target of below $20, I also can't justify buying at current levels, even if it falls below $300. The risks simply outweigh the potential rewards for me.