MicroStrategy Shares Drop 55% as Bitcoin Holdings Worth $44 Billion Raise Liquidation Concerns

Shares of Strategy (NASDAQ: MSTR) have dropped over 55% from a high of $543 to around $250. The company holds approximately 499,096 Bitcoin, valued at about $44 billion, raising concerns about potential forced liquidation.

Analysis of Forced Liquidation Possibility

MicroStrategy's Bitcoin holdings are worth $43.7 billion with an average cost basis of $66,350 per Bitcoin.
The firm has about $8.2 billion in total debt, leading to a leverage ratio of roughly 19%.
Liquidation could occur if there is a "fundamental change" in the company, such as bankruptcy or shareholder dissolution.
Michael Saylor, Executive Chairman, holds 46.8% of voting power, enabling him to block decisions that could lead to liquidation.
An outright forced liquidation is deemed "highly unlikely" due to the structure of convertible notes and capital-raising capabilities.
If Bitcoin prices drop significantly and remain low, MicroStrategy may struggle with debt servicing and raising new capital.

Saylor dismissed liquidation fears, stating the company would continue to buy Bitcoin even if its price fell drastically. However, investor confidence is crucial for MicroStrategy's business model. As of press time, Bitcoin traded at $89,245.

Bitcoin price