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When the stock price (P) exceeds the net asset value per share (NAV) (i.e., mNAV > 1), the company can continue to raise funds and reinvest the proceeds in digital assets. Each additional issuance and purchase increases the per-share holdings and book value, further strengthening the market's confidence in the company's narrative and driving the stock price higher. Thus, a closed-loop positive feedback loop begins to turn: mNAV rises → additional issuance → purchase of digital assets → increased per-share holdings → increased market confidence → further stock price increases. It is precisely because of this mechanism that MicroStrategy has been able to continuously raise funds to purchase Bitcoin over the past few years without significantly diluting its shares.
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