Strategy Stock to Erase Nearly Half Its Value as Crypto Craters

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(Bloomberg) -- Shares of Michael Saylor’s Strategy are on track to fall nearly half from their peak as investors fret about economic headwinds and retreat from cryptocurrency-related bets that had initially benefited from Donald Trump’s election win.

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The stock of Strategy, formally known as MicroStrategy, are down 16% on Monday to $240.96 as of 3:37 p.m. in New York. If the decline holds through the end of the session, it will have lost 49% of its value since closing at an all-time high of $473.83 in November.

Investors seeking crypto exposure had piled into shares of the firm as the CEO, a fierce advocate of Bitcoin, turned it into a sort of holding company for the cryptocurrency. The firm plans to raise $42 billion in the next few years by borrowing money and selling stock to fund Bitcoin purchases.

Strategy’s stock went up faster than Bitcoin last fall, fueled by hopes that Trump would create a strategic Bitcoin reserve that would purchase the cryptocurrency. But as Bitcoin has given up most of those gains in recent weeks, Strategy has also gone down much faster.

The mood has turned particularly sour since the Trump administration made it clear last week that the planned reserve will be made up of tokens the government already owns, with only “budget neutral strategies” authorized for buying more.

Bitcoin and Strategy were also hit on Monday by the broader turn away from risk assets as investors grow more concerned about the threats to economic growth, including Trump’s trade standoff with Canada, Mexico and China. Bitcoin fell about 5% Monday to trade around $79,000.

Strategy’s stock is still up slightly from where it closed on Election Day. And Wall Street remains optimistic: Strategy has a buy rating from all 11 analysts in a Bloomberg survey, and the average price target sits well above last year’s record at $540.

But even before Monday’s rout, Strategy had already lost lost 28% since the close on Jan. 17, the trading session before Trump’s inauguration.

Other crypto-linked stocks have pulled back as well. Coinbase Global Inc. slid 26% from Jan. 17 through Friday, while Galaxy Digital Holdings Ltd. and crypto miners such as Riot Platforms Inc. have also slumped.