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E-MailHenry T. C. Hu is the Allan Shivers Chair in the Law of Banking and Finance at the University of Texas Law School. This paper is based on his recent article, forthcoming in the Journal of Corporation Law.
Strategy Inc (MSTR), formerly MicroStrategy Incorporated, functions differently from other public companies. At its core, the firm produces no goods or services, has no operating cash flow, and does not compete with other companies. Yet, by early 2025, its share price had risen 27-fold since it began its transformation to a new corporate model less than five years earlier. Its stock’s 110% annualized return was multiples higher than any S&P 500 stock. In a Financial Times film released that spring, Michael Saylor, its chairman and co-founder, stated that the firm’s stock market capitalization of $100 billion “can grow” 100-fold to $10 trillion by 2045—i.e., the current combined market capitalization of Amazon, Apple, and Microsoft.
MSTR styles itself as the first and largest “bitcoin treasury company” (BTCo). Corporations worldwide began imitating its BTCo model. With 4% of all outstanding bitcoins, MSTR is the largest known institutional holder. In 2025 it issued more equity capital than any other U.S. company.
This Article is the first academic work on the law and economics of the MSTR model. It introduces two concepts: “corporate omphaloskepsis,” which helps capture the model’s ends and means, and “polypharmacy of financial risk,” which frames some key consequences for shareholders. MSTR’s path to shareholder wealth maximization departs from longstanding financial and legal understandings. For ordinary public companies, the animating engine of shareholder wealth management rests on the production of goods and services. Perhaps the foremost task of management is to produce new or better goods and services or ones at lower cost than competitors. The overarching pecuniary corporate end is to maximize the fundamental value of its shares, relying on a convergence of share price to fundamental value to maximize shareholder wealth.
For MSTR, at bottom, the animating engine rests largely on repeatedly issuing shares at a premium over the per share net asset value (NAV) of its bitcoin holdings, with proceeds immediately deployed to buy more. Management focus is on these issuances and purchases, on sustaining and, ideally, expanding the share price premium, and on promoting bitcoin. Through its capital structure and other means, MSTR stock is intended to offer amplified exposure to bitcoin prices. MSTR’s overarching end departs from that of ordinary public companies. It is to directly maximize its share price, not share fundamental value, and relies on divergence, not convergence, between share price and share fundamental value (as proxied by that per share NAV).
The Article calls this “corporate omphaloskepsis”: the firm gazes inward at two numbers—bitcoin’s price and its share price’s premium over NAV—with the outside world mattering only insofar as it moves them. So long as the premium holds, each issuance is arithmetically accretive to NAV—an internal arbitrage in which new shareholders subsidize existing ones. MSTR’s bitcoin advocacy works on two margins: it lifts its core asset’s price and, by burnishing the case for the amplified bitcoin exposure MSTR shares offer, helps sustain the premium. Unlike ETFs, whose authorized participant mechanism tethers share prices to NAV, MSTR shares usually traded at a substantial premium—a deviation central to its animating engine.
A sharp break in crypto assets in late 2025 sent MSTR shares plunging from their all-time high, while the premium contracted markedly. Bitcoin, MSTR’s share price, and the premium are currently far below prior peaks.
Beyond offering an analytical framework for dissecting a new kind of public company, the Article’s contributions are threefold. First, it shows that MSTR’s core ends and means are unique. Its ends are an extreme “financialization” of the shareholder wealth maximization contemplated by corporate law and corporate finance theory. Its essential means depart from ordinary public company logic: the animating engine runs on share price premiums and bitcoin purchases. Sustaining the premium also requires other sui generis managerial tasks: e.g., amplifying bitcoin exposure, promoting bitcoin, and catering to investor heterogeneity with unusual intensity. The Article also explores puzzles in identifying the share price at which the engine functions, including a “Fulcrum Ratio” concept and competing methods for calculating “mNAV” (multiple of share price to per share net asset value).
Second, the Article identifies novel shareholder protection and societal welfare concerns. Shareholders confront a “polypharmacy of financial risk” more complex and harder to assess than its medical namesake. The interactions among a wide range of hazards—bitcoin’s volatility, MSTR’s status as a bitcoin whale, the amplified exposure embedded in its capital structure, and substantive, process, and regulatory risks associated with MSTR’s animating engine—are reflexively coupled. The composite risk exposure is profoundly idiosyncratic and may be closer to Knightian uncertainty than calculable risk. MSTR’s unusually heavy retail ownership and the missives seemingly encouraging ill-diversification exacerbate the concerns. The societal concerns center on economic growth. MSTR’s advocacy that public companies redirect securities issuance proceeds from product development to bitcoin accumulation cuts against the innovation on which long-run economic dynamism depends.
Third, the Article proposes responses. Its proposals are not predicated on MSTR or bitcoin being Ponzi-like, meme stock-like, or otherwise suspect. Instead, these proposals are grounded in a principle of neutrality between the MSTR model and the ordinary public company model. Existing private ordering and federal disclosure rules have inadvertently favored the former, boosting demand for MSTR shares. On the private ordering side, the MSCI Global Investable Market and Nasdaq-100 indexes—primarily meant to capture only operating companies—nonetheless include MSTR due largely to outmoded eligibility criteria and MSTR’s legacy, relatively insignificant, software business. The inclusion forces purchases by every investor tracking these benchmarks. On the regulatory side, the Securities and Exchange Commission (SEC) “Management’s Discussion and Analysis” (MD&A) requirements call for public companies to offer thoughtful management assessments of their prospects, including the risks and uncertainties associated with key business drivers. As drafted, it is unclear whether the MD&A reaches the mNAV driver of BTCos like MSTR. As for the indexes, moving toward neutrality warrants serious consideration. As for the SEC, it should determine the circumstances in which the MD&A applies to the mNAV.
The questions the MSTR model raises are numerous and foundational. The analytical framework the Article offers, and the steps it proposes toward model neutrality, may be useful starting points.
An Afterword briefly outlines some of the changes to MSTR’s functioning announced on May 5, 2026 that were too late to be reflected in the Article. On June 29, 2026, MSTR announced it had adopted a “Digital Credit Capital Framework” with components related to its holdings in U.S. dollars, preferred stock dividend and repurchase policies, common stock repurchases, bitcoin sales, and “soft” mNAV-related constraints on common stock issuance. The Afterword’s concluding sentence was, “[i]n sum, the MSTR bitcoin treasury model is evolving. The corporate omphaloskepsis and polypharmacy of risk remain.” This remains true after the June 29 announcement.
The complete article is available here.
