Short-selling institution Kerrisdale Capital released a research report on Thursday, criticizing the overvaluation of the stock price of MicroStrategy, the dominant holder of Bitcoin among US-listed companies, and announced that it is shorting MicroStrategy stocks. As soon as the report came out, MicroStrategy’s stock price plummeted more than 11% on Thursday.
(Previous summary: BTC falls below $64,000》MicroStrategy buys an additional $600 million worth of Bitcoin, this time at a loss?)
(Background supplement: Buy, buy, buy! MicroStrategy raises another $500 million to buy more Bitcoin (BTC))
Kerrisdale Capital, as a short-selling institution, released a research report on Thursday stating that the institution is long on Bitcoin but shorting the stock of MicroStrategy, the dominant holder of Bitcoin among publicly listed companies. It argues that MicroStrategy’s stock price, compared to the driving value of Bitcoin, has shown an unreasonable premium:
Kerrisdale Capital pointed out that the implied Bitcoin price of MicroStrategy’s stock currently exceeds $177,000, which is 2.5 times the current price of Bitcoin. However, among all the reasons that make MicroStrategy’s stock price attractive, there is no reason that can prove that “paying more than twice the price for the same token is reasonable.”
Kerrisdale Capital believes that with the introduction of Bitcoin spot ETFs, MicroStrategy’s stock is no longer the primary way to expose oneself to Bitcoin:
Since the approval and listing of Bitcoin spot ETFs in January this year, the cumulative trading volume has far exceeded $150 billion, attracting a net inflow of $18.3 billion. Kerrisdale Capital disclosed that it holds long positions in BlackRock and Fidelity’s Bitcoin spot ETFs.
MicroStrategy continues to implement its strategy of accumulating Bitcoin. The company currently holds 214,246 Bitcoins, accounting for 1% of the total Bitcoin supply. The cost of the holdings is $7.53 billion, and the current value is $15.08 billion, with a floating profit of approximately $7.55 billion.
MicroStrategy’s stock price plummets. After the report was released, MicroStrategy’s stock price plummeted by $273.64 or 14.3% to $1,645.52 during Thursday’s trading session. It closed down $214.60 or 11.18% at $1,704.56. However, despite the sharp drop on Thursday, MicroStrategy’s stock price has still surged 169.87% since the beginning of the year.
[Image]
MicroStrategy’s stock price. Image source: GOOGLE
According to a previous report by S3 Partners, Kerrisdale is not the only investor shorting MicroStrategy’s stock. The total short position of cryptocurrency-related stocks is $10.7 billion, with MicroStrategy and Coinbase accounting for 84% of these short positions.
[Image]
Related reports
Will Coinbase buy a large amount of Bitcoin? Issuance of $1 billion convertible senior notes, following MicroStrategy
Bitcoin breaks $72,000! MicroStrategy goes all-in with another $820 million to buy 12,000 BTC
BTC’s massive surge winner! Michael Saylor’s net worth increases by £700 million in three days, MicroStrategy’s stock price soars 40%