MSTR Stock Could Soar to $1,000 in a Short Squeeze
Summary
- Strategy (NASDAQ: MSTR) is the largest Bitcoin crypto treasury company in the world with over 630k BTC on its balance sheet.
- Bitcoin could be extremely bullish in 2025 and could break out to $175,000 in Q4 2025 starting with a massive runup during October.
- As short sellers cover their positions, MSTR stock could soar to as high as $1,000 by EOY.
The MSTR short squeeze could be one of the best short squeeze stocks to own in 2025 before we enter Q4, the best quarter for crypto annually.
According to Fed Watch, the Federal Reserve is expected to cut interest rates 3 times in 2025. This could be the beginning of explosive MSTR upside after several summer months of selling off due to mNAV compresson.
I originally told my Youtube subscribers to buy MSTR stock back in April 04 when it traded around $140. MSTR stock is up over 100% since I uploaded that video.
I'm smashing the buy button again as we approach an incredibly lucrative Q4 for both Bitcoin and MSTR holders.
As I type this, MSTR stock has been going down. Many frustrated investors are ready to sell MSTR and cut their losses.
However, this is actually one of the best buying opportunities I've seen in a while. MSTR is ready to not only short squeeze but also gain S&P 500 inclusion and its first positive annual EPS year as a Bitcoin treasury company.
Let's do a quick deep dive analysis into MSTR before I walk you through my thesis on a massive short squeeze.
MSTR Stock Overview
Strategy (NASDAQ: MSTR) is the world's largest corporate holder of Bitcoin with over 629,000 BTC on its balance sheet.
The company began acquiring Bitcoin on August 11th 2020 when former CEO Michael Saylor discovered that BTC was a better store of value and long term investment than holding government fiat cash.
Fast forward to today, MSTR shares are up over 2,000% since Strategy implemented its Bitcoin treasury strategy. Buying Bitcoin has helped MSTR outperform the entire S&P 500, Gold, Real estate, and pretty much every other asset class.
Strategy's Bitcoin holdings give it the #5 largest corporate treasury Vs S&P 500 companies with over $71 billion in BTC holdings.
How MSTR Acquires Bitcoin
Strategy used 3 main ways to accumulate Bitcoin:
- Borrowing money via convertible notes
- Selling MSTR stock ATM to raise capital
- Selling preferred shares to raise capital
MSTR Convertible Debt
Strategy owes ~$8 billion in convertible debt with the first notes due in 2028. MSTR has a very reasonable debt to BTC equity ratio of just 11% and won't have to sell all of its Bitcoin to cover its debts unless BTC falls well below $50,000.
Selling MSTR Common Shares
Saylor raises money to buy Bitcoin through a massive $21 billion ATM program that dilutes shareholders in order to increase MSTR Bitcoin per share. All dilution is accretive as long as Bitcoin's price trends upwards over time.
Selling MSTR Preferred Shares
Strategy is aiming to capture market share from the fixed income market by issuing STRC, STRF, STRD, and STRK. MSTR Preferred shares give investors passive income opportunities backed by the Bitcoin on Strategy's balance sheet.
Michael Saylor also said the company could sell Bitcoin future or OTM call options to generate revenue to cover dividend payments on preferred stocks.
Short Sellers Are Holding $9 Billon in MSTR Short Positions
The success of MSTR and Michael Saylor attracted a ton of short sellers during MSTR's November 2024 price breakout.
There are over $9 billion in short positions on MSTR with a short interest of around 8% according to Marketbeat.
Jim Chanos and Citron Research both publicly issued negative statements on MSTR and began shorting the stock.
According to CNBC, Chanos is long Bitcoin and short MSTR and advises against copying Michael Saylor's Bitcoin treasury strategy.
Chanos argues that, “We’re selling MicroStrategy stock and buying bitcoin and basically buying something for $1 selling it for two and a half dollars”.
Short sellers as Chanos have heped contribute to the MSTR price decline since November 2024.
Some of the short sellers are convertible note holders who went short to hedge against their positions.
There is a substantial amount of negative sentiment towards Saylor's Bitcoin accumulation strategy yet also creates a unique opportunity to profit from mNAV expansion and impressive annual EPS numbers for FY 2025.
MSTR mNAV Could Expand during Q4 Bitcoin Bull Run
mNAV is the multiple Net Asset Value metric that many investors use to value MSTR common stock.
Right now, the MSTR mNAV trades around 1.5x for the total diluted shares but I expect that trend to reverse during the Q4 bull run.
A potential September 2025 interest rate cut will create a tailwind event that sends Bitcoin prices higher as investors look for higher returns on their liquid cash.
This is evident since recently many investors are selling BTC and IBIT to buy MSTR at these current lower price levels.
As Bitcoin moves up later this year, hype and excitement could lead to higher mNAV valuations and thus higher MSTR prices.
Why MSTR Could Short Squeeze to $1,000
Interest rate cuts plus a bullish Q4 for crypto could help send MSTR shares to as high as $1,000.
Crypto analysts predict Bitcoin could reach $165,000 to $175,000 by the end of 2025. That's around 50% upside from its current price range.
Global M2 Supply and Bitcoin are closely correlated and don't show any signs of an early market top. I'm still bullish on MSTR and BTC despite several analysts stating “we are already at the top”.
If Bitcoin goes up by 50% then I expect MSTR to go up at least 75% because it trades at a mNAV to its underlying Bitcoin holdings.
However, I believe the mNAV could move towards 2 or 3 as well once Wall Street realizes how undervalued it is.
If Bitcoin finishes over $150,000 in 2025 then MSTR will have $40 billion in net income and a diluted EPS of $80 per share.
With a $100 bilion market cap, MSTR stock would be valued at a P/E ratio of 4. Nearly $25 billion in projected 2025 annual income could force naysayers to reposition their stance on mNAV.
If we readjust the mNAV to align with the average S&P 500 P/E ratio of around 29 then MSTR stock could trade 5 to 6x what its currently valued at.
Another potential gain could be a postive increase in mNAV towards 3 or more.
JP Morgan is currently valued at 2.5x NAV while NVDA stock is currently valued at 50x its NAV.
Greed could lead to mNAV expassion, which means higher MSTR prices. A 2x mNAV means MSTR could 2x to $700 or $1,000 if the MSTR mNAV heads towards 3.
It's really important to pay attention to mNAV compression and expansion to find out the best exit strategy this cycle.
I won't be selling long MSTR shares but plan to sell ALL of my long MSTR call options once MSTR prices get crazy.
My MSTR Short Squeeze Exit Strategy
Michael Saylor published a graphic stating that the company would actively sell MSTR stock to buy Bitcoin if the price of MSTR stock reached over $1,000.
That's a major resistance level for MSTR that could signal a good exit opportunity if the short squeeze plays itself out.
Assuming no further dilution, MSTR would be a $280 billion market cap valuation if MSTR stock hit $1,000.
If Bitcoin does go up around 50% in Q4 then MSTR's BTC holdings would be worth around $110 billion. I expect the MSTR Bitcoin mNAV to expand towards 3 as investors rush in to profit from BTC's price appreciation.
Once the MSTR mNAV approaches 2.5 or higher then I will be looking to take profits or completely exit most of my positions.
Best Ways to Profit from the MSTR Short Squeeze
Here are several ways to make money if the MSTR short squeeze plays out as planned:
- Buy and hold MSTR shares then sell them once the shorts begin to cover
- Buy MSTR call options expiring at least 3 months in advance then sell them once the shorts begin to cover
- Buy MSTU or MSTX, the 2x MSTR leveraged ETFs, to multiply your gains
Buy and Hold MSTR
Buy MSTR in your brokerage or retirement account then sell the shares later for a tidy profit. If you plan to invest your life savings for a potential MSTR short squeeze then this is definitely the safest bet. Other investment options such as options trading and leveraged ETF products add additional risk.
Buy MSTR Call Options
If you don't mind using leverage then buying 90+ day (aka 3 months) options could pay off well. The 3+ month timeframe gives your option more time to finish ITM and not suffer from Theta Decay.
In 2024, my friend shared a really profitable MSTR options trade in August 2024 that paid off like crazy during the November 2024 MSTR runup.
He simply bought MSTR calls way OTM in August 2024 when everyone was afraid of crypto.
I'm using the same strategy this year hoping history will repeat.
I bought 11/21 MSTR $660 calls as my lotto play for MSTR just in case both Bitcoin and MSTR soar to the moon.
I'm already up 55% on these calls and plan on buying more in my other retirement accounts.
If you want to learn how to trade MSTR options then buy a copy of my Ebook, MSTR Options Cashflow.
Buy MSTR Options Cashflow onBuy 2x MSTR Leveraged ETFs: MSTU or MSTX
MSTU and MSTX are both 2x MSTR leveraged ETF product that provides 2x daily exposure to MSTR. They perform well on extremely green MSTR days due to the 2x multiplier. MSTU is a good pick because it should outperform MSTR during the short squeeze.
Take Profits and Don't Be Greedy
MSTR is an extremely volatile stock that attract a lot of greedy traders who want to squeeze every penny out of the stock.
If MSTR squeezes then it's super important to take profits while the shorts are covering. MSTR could crash like a rock after the short squeeze fades once Bitcoin tops out and MSTR interest declines again.
I set up MSTR limit trades in Robinhood at a predetermined sell price to automate my profit taking.
My guess is MSTR peaks during November or early December so be ready to lock in your gains.
You can always rebuy MSTR shares during the potential 2026 crypto bear market when buyer interests fades and MSTR falls in price.
Risk Factors
There is some major downside risk to MSTR because volatility is built within the company's strategy.
Bitcoin is a risky asset that's only 16 years old. Several major risk factors could cause a massive loss in capital or returns in the future when it comes to holding MSTR.
This stock is not for the faint at heart. I held MSTR through 75% drawdowns in the past.
- Bitcoin Price Crash: MSTR is tied to Bitcoin. As Bitcoin goes, so does MSTR. Bitcoin is the oldest cryptocurrency with the largest market cap of over $2 trillion. It is generally safe but could crash in price during the 2026 calendar year. MSTR generally trade at a multiplier to BTC's price movement. A Bitcoin crash would tank MSTR shares.
- Dilution: If Bitcoin soars in price then MSTR stock will most likely increase dramatically during euphoric bull market runs. If Saylor taps the ATM too aggressively then it could hurt the stock price during the meat of the bull cycle.
Final Words
- Despite being shorted, MSTR shares could soar to as high as $1,000 if the short sellers are forced to cover during Uptober 2025.
- Bitcoin does well historically during Q4, which means MSTR could make a lot of money from BTC gain if Bitcoin approaches $200,000.
- BTC supply on exchanges is drying up so Bitcoin could really pump during a potential Q4 2025 FOMO event.
- Explosive Bitcoin gains plus short covering could push MSTR shares past its previous $540 ATH to $1,000 or more
Commonly Asked Questions Answered
Is MSTR a Ponzi Scheme?
No. MSTR uses intelligent financial leverage to acquire Bitcoin without taking on too much debt. A ponzi scheme pays earlier investors with new investor profits because there are no real company earnings. MSTR earns real income from its Bitcoin gain and returns that earnings to shareholders. Everything is transparent and fully 100% accessible via MSTR's SEC filings and quarterly earnings reports.
Should I buy MSTR shares or Options?
I'm holding both MSTR shares and call options.
Where to Buy MSTR Stock?
I recommend the following US online stock brokerages for buying MSTR stock and trading options:
Is MSTR a Safe Long Term Investment?
I view MSTR as a long term investment so I hold it in my retirement accounts. It's done well over the first 5 years of its Bitcoin treasury strategy so it deserves the label of “long term investment”.
