Is MicroStrategy, Inc. overvalued or undervalued?

As of 31 July 2025, the valuation grade for MicroStrategy, Inc. moved from risky to attractive, indicating a significant improvement in its investment profile. The company appears to be undervalued, particularly when considering its P/E ratio of 47, which is lower than the peer Spotify Technology SA at 92.22, and its EV to Capital Employed ratio of 2.65, which is more favorable compared to its own EV to EBITDA of -3024.97. Additionally, the ROE stands at 6.55%, suggesting a reasonable return on equity relative to its peers.
In terms of performance, MicroStrategy has outperformed the S&P 500 over multiple periods, with a remarkable 1-year return of 163.15% compared to the index's 17.14%, and an impressive 3-year return of 1591.96% versus 70.41% for the S&P 500. This strong performance reinforces the notion that the stock is currently undervalued despite its high P/E ratio.