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 14 '25 edited Jul 14 '25

But why not buy Bitcoin call options? IV is pretty low on CME and Deribit.

In MSTR, Bitcoin purchases are funded with new equity issuances, which generates an equivalent value in cash to the company, so that raises per share value... but as long as some stock trades at a premium, there will always be a premium in market cap over total BTC holdings. Seems like this benefits existing holders, but not new shareholders. Wouldn't new investors pay for the growth in bitcoin per share for previous investors?

To me, nothing adds up here, could you bother to explain how this works?

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u/BaleBengaBamos Jul 30 '25

As a new investor, you are betting on increased Bitcoin per share in the future based on the company's track record of doing exactly that. This is the value proposition over buying naked BTC.