MSTR Fell 14% In A Month. What To Do Now?
Strategy (MSTR) stock is down 14.4% in 21 trading days. While history suggests price dips recover, there is risk – specific to growth, profitability and downturn resilience. Consider the following data:
- Size: A $83 Bil company with $462 Mil in revenue currently trading at $300.70.
- Fundamentals: Last 12 month revenue growth of -3.8% and operating margin of -13.4%.
- Liquidity: Has Debt to Equity ratio of 0.1 and an extremely low Cash to Assets ratio
- Valuation: Currently trading at P/E multiple of 17.3 and P/EBIT multiple of 12.5
- Has returned (median) 28.8% within a year following sharp dips since 2010. See MSTR Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for MSTR, see Buy or Sell MSTR Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and MSTR drops another 20-30% to $210.49 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Strategy (MSTR) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: MSTR provides enterprise analytics software and services worldwide, delivering insights through hyperintelligence, visualization, mobility, and custom applications across diverse industries.
2022 Inflation Shock
- MSTR stock fell 89.3% from a high of $127.29 on 9 February 2021 to $13.66 on 29 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 4 March 2024
- Since then, the stock increased to a high of $473.83 on 20 November 2024 , and currently trades at $300.70
| MSTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -89.3% | -25.4% |
| Time to Full Recovery | 431 days | 464 days |
2020 Covid Pandemic
- MSTR stock fell 39.7% from a high of $15.28 on 5 February 2020 to $9.22 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 September 2020
| MSTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -39.7% | -33.9% |
| Time to Full Recovery | 181 days | 148 days |
2018 Correction
- MSTR stock fell 43.2% from a high of $20.51 on 23 January 2017 to $11.66 on 21 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 17 November 2020
| MSTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -43.2% | -19.8% |
| Time to Full Recovery | 697 days | 120 days |
2008 Global Financial Crisis
- MSTR stock fell 75.9% from a high of $13.24 on 26 February 2007 to $3.19 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 30 March 2011
| MSTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -75.9% | -56.8% |
| Time to Full Recovery | 860 days | 1480 days |
Worried that MSTR could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.