Strategy’s mNAV decoded

Yves-André Graf

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Mar 16, 2025

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“If you’re a company and you’re not thinking about how to put Bitcoin on your balance sheet, you’re not doing your job.” Michael Saylor

In the world of unconventional corporate strategies, few stories rival Strategy’s radical pivot from enterprise software to Bitcoin powerhouse. What began as a bold bet on Bitcoin has redefined how the company is valued by investors. Traditional valuation approaches now take a back seat to a new, investor-created yardstick: the multiple of Net Asset Value or mNAV. This unique valuation lens captures how the market prices not just Strategy’s Bitcoin holdings, but also its future acquisitions and the speculative sentiment in general. As Strategy cements its role as the most prominent Bitcoin proxy on the stock market, understanding the mNAV is essential to decoding what its share price really represents and why it often trades far above the value of the Bitcoin the company actually owns.

How did Strategy’s method of valuation evolve?

Strategy’s original business model as a business intelligence and mobile software company could be fairly easily priced by traditional valuation methods. Even in August 2020, when Michael Saylor announced that Strategy was converting part of their treasury into Bitcoin and adding it to its balance sheet, the valuation remained simple. It was the price of the Business Intelligence and mobile software business and the market value of the Bitcoin held on the balance sheet.

In June 2021, Michael Saylor announced that the company was issuing bonds and the proceeds would be used to acquire additional Bitcoin. Although it did not seem substantial at the time, it was a statement that Strategy was pivoting away from its business intelligence and mobile software business and doubling down on Bitcoin. Interestingly, throughout the next year, as we entered into the Bitcoin bear market, Strategy’s valuation kept declining until it reached a minimum of about half of its Bitcoin holdings in May 2022 (see Graph 1). The market was clearly signaling that it expected Strategy to be forced to sell some of its Bitcoin.

It is during this time, when Bitcoin and Strategy’s stock prices were being depressed, that slowly the Bitcoin treasury emerged as the main valuation driver of the company. In concert, the most broadly adopted method to value Strategy became the mNAV.

Why did the mNAV become Strategy’s main method of valuation?

As the Bitcoin treasury strategy emerged and the Bitcoin holdings became the dominant component of Strategy’s balance sheet, it was clear that the market could no longer value the company based on its business intelligence and mobile software business. It meant traditional valuation methods, mainly profit-and-loss (P&L) based valuation methods, such as revenue-based or earnings multiples, were no longer suited to value Strategy’s Bitcoin heavy balance sheet.

Upon further reflection, it becomes evident that the obsolescence of traditional valuation methods originates from a more fundamental issue: the fact that Bitcoin does not function as a unit of account [yet]. This underlying limitation renders profit-and-loss-based valuation approaches inadequate for assessing the value of Strategy as a whole.

Basically, in order to value Strategy as a Bitcoin proxy, the valuation method had to transition to a balance sheet based method. Additionally, the market needed a way to quantify a premium or discount on the Bitcoin held. Meeting these requirements and thanks to its simplicity, the mNAV became Strategy’s main method of valuation by market participants.

What is the mNAV actually?

Strategy holds a certain amount of Bitcoin on its balance sheet. Multiplying this Bitcoin count with the Bitcoin price gets the Bitcoin Net Asset Value (or Bitcoin NAV). Basically, the Bitcoin NAV represents the market value of the Bitcoin held by Strategy.

Bitcoin NAV = Bitcoin Count x Bitcoin Price

The mNAV is equivalent to the multiple of the Bitcoin NAV, which is simply the Enterprise Value (or EV) divided by the Bitcoin NAV. The EV is a measure of a company’s total value, it reflects the total cost to acquire a business. Thus the EV is equal to the sum of the company’s current market capitalization, total debt, and total preferred stock, minus their most recently reported cash balance. The mNAV can therefore be calculated as follows:

mNAV = EV / Bitcoin NAV

In other words, the mNAV provides Strategy’s valuation, potentially with a premium or discount, on its Bitcoin held. If the mNAV is above 1, Strategy trades at a premium, and if the mNAV is below 1, the company trades at a discount.

Why should Strategy’s mNAV trade at a premium?

Strategy’s mNAV reflects the market’s perception of the company’s Bitcoin holdings and business model. Unlike a simple “Bitcoin per share” valuation, the mNAV captures the premium (or discount) investors assign to Strategy valuation overall. Looking closely, Strategy’s mNAV is currently driven by a few main factors.

Bitcoin held on the company’s balance sheet — Since Strategy holds significant Bitcoin reserves, the mNAV fluctuates with Bitcoin’s price. It is worth noting that market sentiment plays a huge role. The mNAV tends to expand during periods of optimism in regard to Bitcoin and it tends to shrink during pessimistic times. This reflects, to some extent, speculation on the future price of Bitcoin.

Future Bitcoin acquisition — Strategy employs debt and equity offerings to acquire more Bitcoin, amplifying potential returns. Therefore, the accessibility to issuing further debt and equity to the market is a critical component to the future Bitcoin acquisition. The market values this ability to scale Bitcoin exposure beyond current spot holdings. Similarly to traditional valuation methods (such as the Discounted Cash Flow or DCF method), the mNAV is also forward looking. If suddenly the demand for Bitcoin securities starts to decrease, the mNAV should contract consequently as well.

Michael Saylor’s leadership — Although it has a lesser impact on the mNAV, Michael Saylor’s “memetic” premium on the share price, and therefore on the mNAV, cannot be neglected. His influence on the company’s aggressive Bitcoin strategy and his relentless Bitcoin advocacy made him an essential part of the story surrounding Strategy. Michael Saylor has become a figure to Strategy akin to Elon Musk for Tesla.

General market price distortion — The sheer amount of Central Banks’ “market manipulation”, by conjuring liquidity at will and by manipulating the interest rates at their whim, has created price distortion in the markets. Currently, publicly traded stocks in all kinds of industries are overvalued using almost any valuation method. This distortion also applies to publicly traded Bitcoin treasury companies such as Strategy and obviously influences the mNAV to be “overvalued”.

Although the four factors mentioned above are currently the most salient in explaining why the mNAV trades at a premium, the complexity and the sudden changes in the market should not be underestimated. The mNAV can trade at premium and in an instant switch to trading at a discount. Ultimately, the mNAV is worth what the market believes Strategy’s Bitcoin playbook and its strategic execution is worth.

Final thoughts

As Strategy pivoted from a business intelligence and mobile software to a Bitcoin treasury company, the market also had to adapt and decide on a more suitable valuation approach. The mNAV rose as the most suitable valuation method candidate.

Michael Saylor brought the company forward into the Bitcoin Standard and therefore is leaping into a new realm of finance which requires new tools, KPIs and metrics. Michael Saylor already started creating new performance KPIs such as “BTC Yield” and “BTC Gain”. Consequently, it would not be surprising to see more and potentially better valuation methods becoming widespread for Bitcoin treasury companies.