MicroStrategy Faces Technical Support Amid Legal Risks and Negative Earnings Concerns

Technical Analysis

MicroStrategy (MSTR) closed at $369.06 on May 30, 2025, pulling back slightly by 0.42%. The intraday range was between $359.16 and $372.56, testing resistance near $369.51, which aligns closely with the last close, indicating a near-term ceiling. The 14-day RSI at 33 shows the stock approaching oversold conditions, suggesting limited downside from current levels or a potential short-term bounce. The MACD remains strongly positive at 19.32, supporting bullish momentum over the medium term. Price currently trades above both the 50-day ($349.63) and 200-day ($289.88) moving averages, confirming a sustained uptrend. Average volume (17.72 million) exceeds recent daily volume (12.52 million), indicating slightly subdued trading activity.

Immediate support is at $308.55, well below current pricing, providing a meaningful cushion should a correction unfold. The average true range (ATR) of $5.48 reflects moderate volatility, suggesting typical daily price swings within this band.

For the next trading day (June 2), the technical indicators point to a consolidation phase with a slight bullish bias given the oversold RSI and proven support from moving averages. Over the upcoming week, momentum may remain contained below the $370 resistance barrier, with the possibility of sideways movement or mild retracements pending resolution of legal uncertainty.

Fundamental Analysis

MicroStrategy’s trailing twelve-month earnings per share is deeply negative at -$22.65, reflecting ongoing operational challenges or heavy non-cash expenses. The PE ratio is negative at -16.29, emphasizing a lack of profitability. The discounted cash flow (DCF) model shows a significantly negative intrinsic value at -$45.77, highlighting concerns over the company’s current cash flow generation and valuation fundamentals.

Market capitalization stands at approximately $100.90 billion, reflecting investor enthusiasm despite fundamental weakness. The stock’s year-to-date rise of 27.9% is largely attributed to bitcoin exposure and subscription revenue growth. However, this gains-driven rally is counterbalanced by ongoing legal headwinds—specifically multiple newly filed securities fraud class action lawsuits with deadlines extending to mid-July 2025. This litigation risk injects considerable uncertainty into the company’s near-term fundamentals and market perception.

Analyst consensus tilts toward Buy (16 buy, 7 hold, 2 sell), but target prices at $220 are far below the current market price, indicating valuation concerns and potential downside if market optimism fades.

Intrinsic Value & Long-Term Potential

The negative DCF figure and unprofitable earnings cast doubt on MicroStrategy’s intrinsic value, suggesting current share prices incorporate significant speculation rather than stable cash flow expectations. The firm's bitcoin-related asset fluctuations can drive short-term valuation swings but entail substantial risk volatility. While subscription growth is a positive fundamental factor, it is currently insufficient to offset the financial losses and legal uncertainties.

Long-term investment potential hinges on resolution of litigation, improved profitability, and sustainable cash flow generation. Absent clear visibility on these fronts, especially given the stretched valuation relative to intrinsic measures, long-term investors face elevated risk.

Overall Evaluation

MicroStrategy’s stock exhibits strong technical support but is weighed down by negative earnings, adverse DCF valuation, and significant litigation risks. The near-term technical setup suggests limited downside and potential for consolidation, but the fundamental outlook remains challenged. The disconnect between current price and consensus target price ($220) signals considerable downside risk if market sentiment shifts.

Consequently, MicroStrategy classifies as a Hold candidate — attractive for those willing to tolerate volatility and uncertainty, but with caution warranted given substantial risks and stretched valuation metrics.