MicroStrategy, rebranded as Strategy in February, saw its share price fall more than 49% in 2025, setting up balance-sheet and positioning overhangs that analysts argue could persist into 2026. The cautious view centers on a concentrated Bitcoin strategy, a sizable debt load, and an index-related risk that could trigger forced flows.
A near-term institutional catalyst is MSCI’s proposal to reclassify firms that hold more than 50% of assets in digital assets, with a final decision expected by January 15, 2026 and implementation slated for February 2026. If Strategy is removed from MSCI indices, estimates cited in reporting range from roughly $2.8 billion in passive outflows to as much as $9 billion to $11.6 billion.
MSCI Reclassification Risk and Forced-Flow Dynamics
Strategy has publicly opposed the proposal, calling it “discriminatory, arbitrary, and unworkable.” The company’s response highlights how the MSCI dispute is already shaping sentiment and could translate into mechanical selling by index-tracking funds if the reclassification proceeds.
Strategy’s equity has traded as a leveraged proxy for Bitcoin, with reported correlations frequently between 0.7 and 0.95, amplifying both upside in rallies and downside in drawdowns. That linkage, combined with reported debt of roughly $8.2 billion used largely to finance Bitcoin purchases, is a key input behind the 2026 pressure thesis.
Coverage cited around $2.2 billion in reserves versus annual interest and dividend obligations estimated at $779 million, implying roughly two years of coverage under those assumptions. Analysts caution that the cushion could deteriorate quickly if market conditions remain adverse for an extended period.
Management has repeatedly raised capital through share and debt offerings to purchase Bitcoin, a pattern that has driven ongoing equity dilution. Market participants have also noted periods when the stock traded below the implied value of its Bitcoin treasury on a per-share basis, reinforcing skepticism around the capital structure.
The market now applies a meaningful discount to Strategy’s net asset value, attributed to complexity in its financing stack and perceived liquidity risk. This discount has become a central feature of the current valuation debate, rather than a temporary pricing anomaly.
Targets, Bitcoin Dependence, and Early-2026 Watch Items
Analyst targets cited in the text span a wide range, with a 12-month consensus around $465–$541, high-side examples like Benchmark at $705 and TD Cowen up to $680, and low-side targets as low as $175–$229. The dispersion itself reflects how tightly Strategy’s valuation remains tethered to assumptions about Bitcoin’s path and balance-sheet durability.
Analysts emphasize that upside scenarios are still possible if Bitcoin moves materially higher, while downside risks remain pronounced if Bitcoin stagnates or declines. In effect, the equity continues to function as a high-beta expression of BTC direction layered with financing and index-risk complexity.
Investors are focused on three near-term variables in early 2026: the January 15 MSCI decision and any downstream index rebalancing, Strategy’s cash and interest-coverage trajectory, and Bitcoin’s price trend. Together, these factors will determine whether the company can close the valuation discount that followed the 2025 decline and restore confidence.