MicroStrategy's Dilemma: Stock Price Falls Below Net Asset Value, Death Spiral Risk Emerges

MicroStrategy’s Bitcoin gamble is facing an unprecedented test. As BTC prices hover around $90,470, the company’s stock has fallen below its net asset value (NAV), which industry insiders see as a dangerous signal.

The Deadly Hidden Risks of NAV Collapse

EasyA co-founder Don Kwok issued the most direct risk warning: when MSTR’s trading price is below its NAV, the company’s business model is essentially broken. This is not a technical issue but a structural dilemma.

History tells us that no financial company can operate long-term below NAV without paying a price. Kwok further explains that MicroStrategy’s entire strategy only makes sense when MSTR trades at a premium—this mechanism of issuing new shares to buy Bitcoin relies on an implicit assumption: that the market is willing to pay a premium for the company’s stock.

Once this assumption breaks down, the situation becomes critical. Issuing new shares only dilutes existing shareholders’ equity because the company issues more stock than the value of the Bitcoin it acquires. This is the beginning of a death spiral.

The Priority Stock Model Under Fire

Economist Peter Schiff launched a fierce attack from another angle, targeting MicroStrategy’s preferred stock financing strategy. He believes this model is built on a fragile foundation: income-oriented funds are willing to buy high-yield preferred stocks.

But Schiff’s core argument is—these promised yields are fundamentally unattainable. Once institutional investors realize they cannot achieve expected returns, they will withdraw quickly. At that point, MicroStrategy will lose the ability to raise funds by issuing more preferred stock, plunging into a liquidity crisis.

The crypto community has strongly rebutted Schiff’s view, arguing that preferred stocks are just financing tools and have nothing to do with the company’s operational stability. But Schiff’s counterpoint is equally sharp: if the company cannot generate enough Bitcoin gains to meet investor expectations, what value does MicroStrategy really have?

The Worsening Market Environment

Adding to the woes, the overall market environment is deteriorating. BTC has fallen 40% from its all-time high, and MSTR stock has dropped over 50% in the past six months.

In contrast, gold remains near its historic high of $4,000, reinforcing long-standing skeptics’ view—that traditional assets perform more stably under extreme market conditions.

The Chain of Risks in the Death Spiral

The severity of the problem lies in the interconnected effects of these three links:

• Stock price falls below NAV → increased dilution from new share issuance
• Promised yields on preferred stocks become hard to realize → financing ability weakens
• Bitcoin returns fall short of expectations → investment appeal further diminishes

If any one of these links fails, the entire system could enter an irreversible vicious cycle—that’s the so-called death spiral.

No matter how supporters defend, the market is making a ruthless judgment. When stocks fall below NAV, when financing costs rise, and when yields become hard to meet, MicroStrategy will have to face a harsh reality: the sustainability of its Bitcoin gamble is fundamentally in doubt.