NYU Professor Warns Companies Against Moving Cash Into Bitcoin — Unless You're Strategy, PayPal, Or A Meme Stock: 'This Is A Bad Idea'

NYU finance professor Aswath Damodaran is urging caution regarding corporate Bitcoin holdings, which have gained traction in recent years, with just four notable exceptions.

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What Happened: On Saturday, in a post on X, Damodaran said that while the strategy has gained traction thanks to Strategy Inc.'s (NASDAQ:MSTR) outsized bets and Michael Saylor's cult-like status, it's fundamentally flawed for most firms.

“In the last few years, Strategy has become a Bitcoin SPAC, with investors attributing savant-like status to Michael Saylor,” he says, noting that this has led more companies to shift their cash holdings into Bitcoin, which he views as “a bad idea, but there are four carveouts.”

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The renowned valuation expert outlines the exceptions for when, if ever, Bitcoin should be included on a corporate balance sheet. The first is companies whose leadership is especially skilled in trading the digital currency, “much better at timing trades than the average investor.”

However, Damodaran warns that “the peril is that perception is not always reality,” highlighting the risks of misplacing trust in a CEO’s trading acumen in volatile markets like crypto.

The second exception includes firms that use Bitcoin for day-to-day operations. “The bitcoin holdings should be proportional to bitcoin transactions, and operate more like working capital than investing bet,” he says, pointing ...