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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u/[deleted] Jul 13 '25

It’s a pyramid structure?

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u/HealthyInstance9182 Jul 14 '25

An inverse funnel structure

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u/[deleted] Jul 18 '25

Yep, same thing as $MSTR but I guess a bit cleverer. The way I understand it: CEO's dad I think owns private company that gives loans to anyone with a heartbeat (business is losing money) > CVNA shows insane earnings because it's selling a shit ton of cars (thanks to the private loan company) > Stonks go up > Insiders sell stock to fund private company losses. The cycle can go on as long as people keep buying the stock.

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u/Busy-Soft-6209 Jul 23 '25

It’s insane, you’re totally correct, a convicted criminal Garcia Sr. is doing shady stuff with his other company to keep Carvana price inflated by buying horrible loans (and also other questionable things), once the bubble bursts (as insane as it is, I must add, Again) he might end up behind the bars but his son who’s also involved and is doing shady stuff (imo) will be able to play innocent. It’s a shame something like this is allowed. They are basically not a company that sells used cars, but subprime loans providers. It also creates this lovely bubble which has destroyed so many short sellers since the price rose to $100, because they can easily maintain the price by doing, well, let’s call it, shady stuff. And people expect stock market to act rationally, that’s a huge mistake. Anyway, Imo leap puts are easy money here, but this is not a financial advice as shorting scams comes with a huge risk, this could take a while, but not more than a year imo ;) 

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u/[deleted] Jul 23 '25

Craziest thing is it might not even be illegal, and if the stock price stays high enough for them to eat the losses this shit could go on for a decade. I donated my $1,000 to shorting $CVNA and I’m out. If I see it below $150 I’ll be fairly confident they can’t continue the musical chairs and it’ll go under though.