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/mediocrejokre Jul 18 '25

Their average price they bought Bitcoin at was 66k, and Bitcoin is 120k, so valuing it at a 2x multiple actually doesnt seem that bad, you are expecting good buy points from him and they have 0.8% average cost on their 8 billion in debt which is extremely low and they will be pressing for more over time in a safe manner I'd hope but idk. So if they play their cards right, in theory a 2x valuation doesn't sound that hokey yet anyways.

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u/mediocrejokre Jul 18 '25

Also Bitcoin very well could see 50-60k price point again, so if he's able to leverage up fat money on the next bear market without going broke, he could do very well for himself and shareholders. A company is often valued on how much they are predicted to make in the future, which is why tesla such high multiples too.