Shares of MicroStrategy (ticker MSTR) plummeted more than 20% in Thursday's trading session after a research firm noted it was shorting the stock.
Citron Research, led by investor Andrew Left, cheered MicroStrategy Executive Chairman Michael Saylor's vision for selling debt to fund the company's bitcoin purchases since 2020 but noted that the stock's massive runup has been overheated.
"How did this one age? Nearly 4 years ago to the date, Citron was the first to tell readers that MicroStrategy was the ultimate way to invest in Bitcoin, setting a $700 target," Citron said in a post on X. "Fast forward to today: $MSTR has skyrocketed to over $5,000 (adjusted). Kudos to Michael Saylor for his visionary Bitcoin strategy."
MicroStrategy's stock is up nearly 500% this year, outpacing the price of bitcoin (+110%) and the S&P 500 (+25%), according to Yahoo Finance. On Wednesday alone, MSTR surpassed the SPDR S&P 500 ETF Trust (SPY) and Tesla (TSLA) to become the most-traded stock of the day in terms of dollar value. The company is currently trading at about 3x of its net asset value.
Citron noted that investing in bitcoin is much easier today than it was five years ago, with the addition of spot Bitcoin ETFs as well as crypto-related equities like Coinbase and Robinhood.
"$MSTR’s volume has completely detached from BTC fundamentals," the post said. "While Citron remains bullish on Bitcoin, we’ve hedged with a short $MSTR position. Much respect to @saylor, but even he must know $MSTR is overheated."
The Block reached out to MicroStrategy for comment but has not heard back from them at the time of writing.
On Monday, MicroStrategy completed its largest-ever bitcoin purchase, buying 51,780 BTC for approximately $4.6 billion. It now holds roughly $29.7 billion worth of bitcoin, purchased for a total cost of around $16.5 billion, including fees and expenses. The company has a market cap of $80 billion.
MSTR closed down 16.6% to $397.28. Bitcoin traded around $98,200, according to The Block's price page.
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