Strategy Share Price Drivers: How to Trade MSTR Stock

Strategy (MSTR), formerly known as MicroStrategy, is a business intelligence software provider that helps its users to make data-driven decisions. This trading guide delves into the factors influencing Strategy's stock price, the potential reasons to trade Strategy shares, the risks involved in Strategy trading, as well as how to trade Strategy's shares with Contracts For Difference (CFDs).

TL;DR

• Strategy, founded in 1989, provides enterprise analytics, business intelligence (BI), and mobility solutions.
• While its core business revolves around enterprise analytics software, Bitcoin has become a major driver of Strategy's stock price since 2020.
• Strategy's share price can be influenced by its Bitcoin holdings, its financial performance, trader sentiment, economic conditions, regulatory changes, and competitive pressures.
• Traders interested in Strategy can decide to use CFDs over the short-term.

Introduction to Strategy: What Is Strategy Used For?

Founded in 1989, Strategy, formerly known as MicroStrategy, offers a few online solutions that help businesses get actionable insights from their data to make better business decisions. With a focus on Artificial Intelligence (AI) and cloud technology, Strategy provides data analysis, reporting, and visualisation tools.

The company caters to a wide range of sectors, such as financial services, healthcare, retail and government, delivering tailored solutions to meet specific business needs, especially for IT leaders, data leaders, and product leaders, among others.

Rebranding to Strategy

MicroStrategy officially rebranded to Strategy as part of a strategic shift to focus on Bitcoin, transforming from a business intelligence software company to the world's first and largest Bitcoin Treasury Company.

The rebrand, which was unveiled ahead of its earnings call on 5 February 2025, includes a new logo and an orange colour scheme symbolising the company's commitment to Bitcoin. This bold move, which began after accumulating Bitcoin through its operational cash flows and financing, reflects a deepened focus on Bitcoin as the core asset of its treasury.

Moreover, the company's rebranded identity aligns with its expanding use of AI and the launch of new platforms for software and merchandise.

This change was deemed a pivotal moment in Strategy's evolution and its dual commitment to digital assets and enterprise analytics.

What Can Influence Strategy's Share Price?

Several factors can impact the share price of Strategy company, such as:

• Bitcoin Holdings: The performance of Bitcoin (BTCUSD), a significant portion of Strategy's assets, directly influences its stock price.
• Financial Performance: Earnings reports, revenue growth, and profit margins are crucial indicators of the company's health. The earnings season is therefore a key moment for traders to get an idea of Strategy's performance and future growth prospects.
• Market Sentiment: Overall, trader sentiment and market psychology towards Strategy and the broader technology sector can affect stock price.
• Economic Conditions: Economic downturns or upturns (expansion vs recession) can impact business spending on enterprise software and, consequently, Strategy's revenue.
• Regulatory Environment: Changes in tax laws, data privacy regulations, or other government policies can affect the company's operations.
• Competitive Landscape: The performance of competitors in the business intelligence and analytics market can impact Strategy's market share.

Strategy Stock Price History

Since its Initial Public Offering (IPO) in June 1998, Strategy's share prices have experienced bullish and bearish trends. It rose more than 1,525% between June 1998 and August 2024, from $8.13 to around $131.

Here's a breakdown of its key historical movements (adjusted for its stock splits as of August 2024):

Early Gains (1998-2000): The company had a strong rise in its initial years, with its stock price surging over 1,192% from $8.13 to $105. This period likely benefited from the dot-com boom.

Dot-Com Bust and Recovery (2000-2006): The bubble burst in 2000, leading to a 7,549% drop in Strategy's stock price to a mere $1.51 per share. However, the company displayed resilience, recovering between 2003 and 2006, with a 647% gain to $11.40.

Economic Downturn (2007-2008): The global financial crisis of 2008 likely took its toll on Strategy, with its stock price declining 207% to $3.72.

Steadfast Growth and Recent Surge (2009-2024): The following years saw a more stable upward trend, with a 430% increase in price to $19.74 by 2016. After a brief correction in 2017-2018, Strategy's stock price experienced a surge of approximately 995% between 2019 and 2024 (as of mid-August 2024). This recent growth is likely fueled by the company's significant investment in Bitcoin and the increasing demand for its enterprise analytics software with advanced AI capabilities.

The Pros and Cons of Trading Strategy Stocks

Before trading Strategy stock, you should always conduct thorough research and consider both the advantages and risks. This will allow you to make more informed trading decisions.

Why Might Strategy Stock Be An Interesting Trading Opportunity?

• Industry Leader: Strategy holds a strong brand portfolio and position in its industry.
• Innovation Focus: A history of successful product development and market entry.
• Diversified Revenue Streams: Reduced reliance on economic cycles.
• Strong Customer Base: High satisfaction among major clients, such as eBay (EBAY), Visa (V), Société Générale (GLE.PA), Pfizer (PFE), Merck (MRK), Unicredit (UCG.I), Constellation Brands (STZ), and Lowe's (LOW), among others.
• Leveraging Technology Trends: Focus on analytics, AI, and cloud partnerships.
• Strategic Partnerships and Certifications: The company's partnerships with major tech companies like Amazon (AMZN), Microsoft (MSFT), and Google (GOOG), and government, enhance Strategy's high security and data protection standards, as well as credibility and market position.

Why Might Trading Strategy Be Risky?

• Bitcoin Exposure: Strategy's significant Bitcoin holdings introduce volatility to its financial performance.
• Currency Risk: Operating in multiple countries exposes the company to currency fluctuations.
• Competitive Landscape: Competition from tech giants like IBM (IBM), Microsoft (MSFT), Oracle (ORCL), and SAP (SAP.DE).
• Regulatory Challenges: Increasingly complex data privacy regulations can pose risks to the development of Strategy's product development.
• Technological Disruption: The potential for disruptive technologies could impact the business.

How to Trade Strategy (MSTR) Shares with CFDs

CFDs (Contracts for Difference) allow you to speculate on Strategy's stock price without owning the underlying shares or being a shareholder. You can trade both rising markets (with a long position) and falling prices (with a short position).

Leverage is also a key feature of CFDs, enabling you to gain larger exposure in the underlying instrument thanks to margin. However, it can be risky, as it amplifies both profits and losses.

To enhance your CFD trading experience, begin by acquiring a solid foundation in stock trading principles. Then, develop a personalised trading plan aligned with your risk tolerance, trading style, stock trading strategy, timeframe, and goals. Also learn how to avoid common trading mistakes and what risk management is to better protect your capital. Finally, take time to review some stock market trading tips.

If you want to trade Strategy's share price over the short-term, start trading MSTR CFDs with Plus500.