Strategy: Positioned To Capitalize On Its Bitcoin Exposure

Summary Strategy Inc (MSTR) is a unique, leveraged Bitcoin proxy, holding ~3% of global BTC supply and positioned as the largest corporate Bitcoin treasury. MSTR's capital markets strategy amplifies BTC exposure per share, achieving a 25% BTC yield YTD and offering more upside than a standard BTC ￰0￱ remains attractive, with MSTR trading at a discount on traditional metrics and a 50% premium to BTC NAV justified by ongoing coin ￰1￱ tailwinds, institutional adoption, and a small but growing AI-enhanced BI segment support a Buy rating for MSTR despite inherent BTC volatility ￰2￱ Thesis I believe Strategy Inc ( MSTR ) (which was formerly called MicroStrategy) is a unique Bitcoin ( BTC-USD ) proxy with upside ￰3￱ is why I am initiating a Buy rating for ￰4￱ company has intentionally pivoted into the first and largest corporate Bitcoin ￰5￱ is a position that could pay off well if the crypto bull market continues.

I will highlight some of the key reasons behind my Buy ￰6￱ and foremost, Strategy holds approximately 3% of global supply of ￰7￱ holds ~640,031 BTC as of October 6th 2025, making it the largest corporate holder of ￰8￱ mere fact that it's the largest corporate holder makes MSTR not just a listed company but in a unique ￰9￱ has become a strategic player in the digital asset ￰10￱ Bitcoin marches towards institutional and governmental adoption, MSTR is well positioned to deliver outsized returns far beyond what you'd get by simply holding a BTC ￰11￱ to JP Morgan , Crypto Institutional adoption appears to be in the early ￰12￱ of now, institutions hold more than 25% of Bitcoin ￰13￱ though adoption among institutions and corporates is still early, momentum is building gradually.

Secondly, MSTR has figured out a smarter way to grow its BTC holdings rather than just buying and ￰14￱ this is through Leverage. I don't mean the 20th century bank style kind of leverage. Instead, I would actually term it intelligent leverage that has been built on perpetual shares, structured credit instruments and equity ￰15￱ company is able to raise money through stock and preferred shares and then immediately turns around and buys more ￰16￱ in the first half of 2025, MSTR already raised $18Bn by selling preferred securities have been designed to attract different classes of ￰17￱ finally, we raised an impressive $18.3 billion in capital year-to-date, which already accounts for 81% of the total capital we raised in all of last year combined...

Andrew Kang, CFO, Q2 2025 Earnings Call The end result? Every dollar raised becomes another dollar of BTC on their balance ￰18￱ in simple words, it means that each share of MSTR represents more and more BTC over time. That's what they call Bitcoin ￰19￱ MSTR has already hit 25% ￰20￱ means that shareholders are getting more BTC exposure per share without having to do a thing. ... achieved a BTC Yield of 25% year-to-date, meeting our initial full year target in the first 7 months of the ￰21￱ BTC Gain year-to-date is 111,894 Bitcoin, fueled by a strong Q1 and Q2 through the IPOs of our credit instruments... ....

these results reflect the real incremental value from our ability to strategically manage and maximize our treasury operations... Andrew Kang, CFO, Q2 2025 Earnings Call Thirdly, lets layer in the macro ￰22￱ this regard, I would like to think about where Bitcoin could be ￰23￱ estimates that BTC could hit $165,000 by the end of the ￰24￱ Sachs, on the other hand predicts that Bitcoin could surpass $200,000 if Gold hits $5000 and keeps ￰25￱ bottom line is if either of those plays out, MSTR's Bitcoin stash could double in ￰26￱ because Strategy keeps adding to that stash through its capital markets machine, the upside could be bigger for MSTR than for BTC itself.

Now, a very important point that I think people miss out is that MSTR goes beyond the US (or rather North America). I say this because, in Africa where inflation and currency volatilities happen on a daily basis, BTC is not usually considered a speculative asset but rather a mode of ￰27￱ to a report by Chainanlysis, the report shows that in Nigeria, 9 out of 10 crypto transactions are done in ￰28￱ south Africa on the other hand, it's 3 out of 4 (about 74% as per the report). Generally sub-Saharan Africa has quite a high demand for crypto and BTC in general as shown ￰29￱ the interesting thing is this kind of demand is becoming a global store of ￰30￱ and the US lead in cryptocurrency adoption as per Chainanlysis 2025 Global Adoption ￰31￱ as a result of this demand, MSTR sits right on top of that trend with the corporate balance sheet to give investors director ￰32￱ Lastly, I would say that the optionality of AI shouldn't be ignored ￰33￱ the enterprise analytics business is quite small relative to Bitcoin, MSTR still sells AI-enhanced BI software to major ￰34￱ a market where anything with an AI angle commands a premium, it means that this piece of the larger story could act as a secondary growth ￰35￱ Overview Just to give some context, Strategy is not the company it was a decade ￰36￱ then, it was known as a business intelligence BI software vendor that was competing with names such as Tableau and Oracle ( ORCL ).

Today, the BI business is still around, but I would say its a ￰37￱ real story is that Strategy has become the largest corporate holder of BTC in the world, as I mentioned ￰38￱ this pivot, led by the Chairman Michael Saylor , has turned the company into what it now openly calls " the first Bitcoin Treasury company . " In as much as the company now runs mainly as a BTC treasury company, the legacy software segment hasn't disappeared ￰39￱ this is because it still runs its MicroStrategy ONE analytics ￰40￱ with enhanced AI ￰41￱ revenues was $114.5Mn in 2Q 2025, with subscription services growing nearly 70% y/y. Margins remain high at about 69% gross margin on ￰42￱ ideally I believe its a profitable segment but relatively small piece of the ￰43￱ the truth is that no one is buying MSTR stock for BI licenses ￰44￱ rather because of its levered Bitcoin balance sheet supported by a sophisticated capital markets ￰45￱ First, I note that MSTR scores an A-growth grade as shown below.

Specifically, its FWD GAAP EPS Growth stands at 59.14% while the sector median stands at 11.39%. This suggests that MSTR's EPS is expected to grow more than 5x its sector ￰46￱ Alpha Valuing MSTR is a bit of a trick due to the fact that its doesn't fit nearly into any one ￰47￱ the surface, I could treat it like a software ￰48￱ as I have mentioned, the software revenue is barely $450 Mn ￰49￱ to the $70Bn of BTC that its ￰50￱ I treat it like a Bitcoin ETF, however, unlike an ETF, Strategy uses its balance sheet to raise capital and amplify its BTC ￰51￱ that regard, I decided to look at the traditional valuation lens together with the Bitcoin Treasury Model as defined by Andrew Kang, the company's CFO; ...

Bitcoin treasury model is consistently accumulating more Bitcoin per share, the highest of any Bitcoin Treasury Company directly and measurably value -- increasing value for our ￰52￱ in 2020, and over the last 4.5 years... Andrew Kang, CFO, Q2 2025 Earnings Call So from a traditional lens, I note that MSTR has its FWD GAAP P/E at 7.50x while the sector median stands at 33.45x, suggesting a 77.57% discount relative to the sector. Additionally, its FWD Non-GAAP P/E stands at 4.16x while the sector median is at ￰53￱ this again, suggests an 83.75% discount as shown below. Clearly, from the traditional lens, I believe that MSTR is trading at a discount relative to the sector.

However, I need to point out that one of the reason why the P/E shows that MSTR is dirt cheap is because most of the earnings are mostly unrealized gains from BTC fair value accounting. Therefore, if BTC rises, income explodes and vice ￰54￱ Alpha Now when I consider the Bitcoin Treasury Model (the way MSTR management does it), the key metric is the market NAV ￰55￱ is defined as the enterprise value divided by the Bitcoin ￰56￱ simply means that if MSTR traded exactly at the value of its coins, then mNAV would be ￰57￱ of now it's 1.5x which means that investors are paying a 50% premium over the raw BTC ￰58￱ the question is why pay the 50% premium?

And that's because MSTR keeps adding more ￰59￱ mentioned the BTC yield YTD is 25% and the company expects 30% by year end and $20Bn BTC ￰60￱ be honest, no ETF can offer that kind of ￰61￱ least for ￰62￱ BTC was to go to where JP Morgan and Goldman Sachs had predicted (at $165k and $200k respectively) then NAV would ￰63￱ the mNAV stays at 1.5x then the stock would be trading above $500 a ￰64￱ of And clearly, if sentiment pushes mNAV higher, then the upside could be even ￰65￱ the average October Spot price for BTC at $124,000 and BTC holdings of 640K, then the market holdings would be an implied value of $79Bn. Adding the mNAV premium of 1.5x would yield an implied EV of $120Bn which in turn would yield an implied price of $355 assuming 335 Mn diluted shares.

Strategy's Key Risk The biggest risk I see for Strategy as of now, is the fact that a huge portion of MSTR's balance sheet is pegged on ￰66￱ like any other asset class is prone to volatility. Specifically, Cryptocurrencies face higher volatilities given the nature of the ￰67￱ means that news and sentiment could affect the price of BTC which eventually translates into the share price of MSTR given the amount of BTC they ￰68￱ Thoughts As I have elaborated, there quite a number of factors that are to like about ￰69￱ capital markets engine and the way management raises money is quite clever. I have also mentioned about the gradual institutional adoption of cryptocurrencies who now hold more than 25% of the BTC ￰70￱ is also the aspect of macro tailwinds which are in favor of BTC and MSTR by extension.

MSTR's BI software also has an AI edge in as much now software forms a very small portion of ￰71￱ these reasons make me believe that Strategy warrants a Buy rating.