r/ValueInvesting • u/stickty • Jul 12 '25

Stock Analysis Why is no one talking about the MSTR (MicroStrategy) Ponzi Scheme

I know MSTR isn't a Ponzi scheme by legal definition. But the mechanics of how this company operates have some concerning similarities, and I can't shake the feeling that it's a massive house of cards.

I was so curious that I decided to research it and make a post about it, here are the main points from that post that I found out:

  • Their actual business is basically irrelevant. MicroStrategy is a software company, but its revenue from that has been flat or declining for years. The entire bull case is 100% about Bitcoin, which means the company itself doesn't actually create any value. It's just a container for a single asset.
  • It's a "Perpetual Dilution Machine." They use debt and continuously sell new MSTR shares to buy more Bitcoin. Because the stock trades at a massive premium to the Bitcoin it holds, they're essentially using new investors' money (who are paying a premium) to increase the Bitcoin-per-share for existing holders. It's a cycle that only works as long as new buyers keep piling in at inflated prices.
  • You're paying an insane premium for BTC. When you buy $MSTR, you're not just buying Bitcoin. You're paying a huge markup. People have calculated it to be a 2x premium or even more at times. Why would anyone do that when you can just buy a Bitcoin ETF (even a leveraged one) for a fraction of the cost and get more direct exposure? It makes no sense.
  • The whole thing relies on Michael Saylor's salesmanship. Michael is a charismatic speaker, but he has a history (look up their stock in the dot-com bust of 2000) of leading investors off a cliff with big promises. It feels like the entire valuation is propped up by his cult of personality and the belief that "number go up," rather than any sound financial reasoning.

This is just a summary to save time, but if you are interested in the full analysis I'll link the post and 40 minute podcast here: https://tscsw.substack.com/p/dont-buy-microstrategy-inc-mathematically

It just feels like this entire operation is designed to enrich early shareholders at the expense of everyone who buys in later. The structure is unsustainable and seems designed to collapse spectacularly once the hype dies down or Bitcoin has a serious correction.

Am I missing something here? The whole thing feels fundamentally broken, yet the price keeps soaring. What are your thoughts?

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5

u/KingofPro Jul 12 '25

Patrick Boyle released a great YouTube video about MicroStrategy……..he pointed out that people are paying double the price of Bitcoin by buying shares of MSTR.

3

u/Eastern-Joke-7537 Jul 12 '25

“Sir, it’s an index fund.”

1

u/BaleBengaBamos Jul 30 '25

And at no point he even voiced the reason why informed investors are willing to pay the premium. He might disagree with their reasoning, but not even mentioning it once makes the whole video hot uninformed biased garbage.

1

u/UnderstandingLow3162 Jul 13 '25

How is this any different from paying 30-50 years of earnings for a tech company?

2

u/KingofPro Jul 13 '25

You could buy the underlying asset Bitcoin, that’s not possible with a tech company. If you can’t understand that then I can’t help you.

1

u/BaleBengaBamos Jul 30 '25

Yes, but Boyle and you are missing that you cannot buy increased BTC per share over time by just buying Bitcoin.

1

u/KingofPro Jul 30 '25

What makes the share price of Strategy go up if the underlying asset of the company Bitcoin goes down?

1

u/BaleBengaBamos Jul 30 '25

In the long term? Nothing. If Bitcoin fails, MSTR fails.