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Short-selling firm Kerrisdale Capital released a research report on Thursday criticizing the overvaluation of MicroStrategy, the dominant holder of Bitcoin among publicly traded U.S. companies, and announced that it is shorting MicroStrategy's stock. The release of the report caused MicroStrategy's stock price to plummet by over 11% on Thursday.
In the research report, Kerrisdale Capital stated that while they are taking a bullish position on holding Bitcoin, they are shorting MicroStrategy's stock, believing that MicroStrategy's stock price is excessively inflated relative to the value of Bitcoin. They pointed out that the surge in MicroStrategy's stock price has closely tracked the rise in Bitcoin prices but has exhibited an unreasonable premium.
According to Kerrisdale Capital's analysis, the implied Bitcoin price in MicroStrategy's stock price has exceeded $177,000, which is 2.5 times the current price of Bitcoin. However, they believe that a stock price paying significantly more than twice the price of Bitcoin is unjustified. Kerrisdale Capital also believes that with the emergence of Bitcoin spot ETFs, MicroStrategy's stock is no longer the preferred route for exposure to Bitcoin. They noted that acquiring Bitcoin is now easier through brokers, cryptocurrency exchanges, and low-cost ETPs and ETFs.
Kerrisdale Capital disclosed that they hold long positions in Bitcoin spot ETFs offered by BlackRock and Fidelity. Meanwhile, MicroStrategy continues to execute its strategy of accumulating Bitcoin, currently holding 214,246 Bitcoins, accounting for 1% of the total Bitcoin supply. The cost of holdings is $7.53 billion, with the current value standing at $15.08 billion, resulting in an unrealized gain of approximately $7.55 billion.
Following the release of the research report, MicroStrategy's stock price plummeted by 14.3% at one point during Thursday's trading session, reaching $1645.52, and closed down by 11.18% at $1704.56. It is worth noting that despite Thursday's significant drop, MicroStrategy's stock price is still up by 169.87% year-to-date.
According to Coindesk, Kerrisdale is not the only investor shorting MicroStrategy's stock. According to a report by S3 Partners, the total short interest in cryptocurrency-related stocks amounts to $10.7 billion, with short positions in MicroStrategy and Coinbase accounting for 84%. Despite the steep decline in MicroStrategy's stock price, based on its past record, its stock price still represents a significant increase of over 100%, making this event seemingly painless for MicroStrategy. |
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Post time 10-4-2024 12:39:49