As the MSTR stock dives, is the 183% yielding MSTY a better buy?

The Strategy stock price continues to plunge this month and has now fallen to the lowest level since April this year. It has moved into a deep bear market after falling by 35 percent from its highest level this year.

This article explores why the MSTR stock price has decoupled from Bitcoin and whether the 183% yielding Yieldmax MSTR Option Income Strategy ETF (MSTY) is a better alternative.

Why the MSTR stock price is crashing 

The Strategy stock price has plunged in the past few months as it decoupled itself from Bitcoin. In addition to falling by 3t% from the year-to-date high, it has dived by 45% from its all-time high in November last year.

There are a few reasons why the MSTR, stock price is crashing this year. First, some investors have started to question the Bitcoin treasury strategy and its implications. One of those investors was Jim Chanos, a famous short-seller who placed a short position on the company a few months ago.

The main concern is on the valuation of these companies and why they deserve a premium. The logic behind this is that, ideally, a company like Strategy should be valued based on the Bitcoin assets it has on its balance sheet.

In the current case, the company’s market cap and enterprise value are $69 billion and $100 billion against its Bitcoin holdings of $69 billion. The gap between these valuation metrics and the Bitcoin holdings is hard to explain.

The other concern is that the industry has become highly saturated, with the number of companies with Bitcoin in their balance sheet soaring. These companies now hold over 1 million coins, a figure that continues to grow.

Further, Strategy’s mNAV figure has plunged in the past few months, moving from 3.1 in November last year to 1.227 today. A falling NAV multiple is risky for the company because it has an impact on how it funds its Bitcoin purchases.

Historically, Strategy resisted selling shares when the NAV multiple was below 2.5 until Michael Saylor removed the rule in August. The company is now funding its purchases by selling shares, which is diluting its shareholders.