Citron Research claims that MSTR has effectively turned itself into a Bitcoin investment fund. While we have great respect for MSTR CEO Saylor, he must know that MSTR is overheated.
Written by: He Hao
Source: Wall Street View
On Thursday during U.S. stock trading, MicroStrategy (MSTR), known as a "major Bitcoin holder," saw its stock price plummet. Previously, Andrew Left's Citron Research posted on social media platform X stating that it is shorting this software company, which has effectively transformed itself into a Bitcoin investment fund.
MSTR continued its previous surge on Thursday morning, with the stock price rising as much as 14.6% during the day, reaching a historic high of $543. However, it quickly fell, dropping over 21% from its intraday high and down 10% from Wednesday's closing price.
Afterward, MSTR's intraday losses narrowed somewhat, but more than an hour before the market closed, it continued to decline, breaking below the morning low, with the intraday low retreating over an astonishing 31% from the day's high. Ultimately, MSTR closed down over 16%.
As of Wednesday's close, MSTR has accumulated a 650% increase this year. By Thursday's close, MSTR still had an increase of nearly 530% year-to-date.
Bitcoin broke through the $98,000 mark during Thursday's trading, setting a new historical high, which also boosted MSTR's stock price in the morning. MSTR's market capitalization briefly exceeded $100 billion, making it as valuable as the top 100 stocks in the S&P 500 index. MSTR's market cap has also surpassed the combined market value of the world's two largest gold mining companies, Newmont Corporation and Barrick Gold Corporation.
Under the leadership of CEO Michael Saylor, the company has spent heavily on Bitcoin, sometimes even financing through debt issuance, rapidly rising with its "Bitcoin strategy." MSTR has almost become synonymous with Bitcoin, acting as a shadow stock for Bitcoin. However, with the launch of Bitcoin ETFs, investors can now directly purchase these ETF funds without needing to invest indirectly through MSTR's stock.
Here is Citron's post on X:
Nearly four years ago, Citron was the first to tell readers that MicroStrategy (MSTR) was the ultimate way to invest in Bitcoin, setting a target of $700.
Fast forward to today: MSTR has soared to over $5,000 (adjusted). Hats off to Michael Saylor's visionary Bitcoin strategy.
Now, with Bitcoin investment easier than ever, MSTR's trading volume has completely detached from Bitcoin fundamentals. While Citron remains bullish on Bitcoin, we have hedged our position by shorting MSTR.
We have great respect for Saylor, but he must know that MSTR is overheated.
MSTR did not immediately respond to Citron's comments.
Citron's post regarding MSTR is one of the few public statements made by Citron founder Andrew Left since he was accused of securities fraud in July. In September, Citron published a piece on bets against private prisons. In October, Left requested a judge to dismiss the U.S. Securities and Exchange Commission (SEC) lawsuit against him.
Citron is not the first to suggest hedging bullish Bitcoin positions by shorting MSTR. In March of this year, another well-known firm, Kerrisdale Capital Management, made a similar suggestion, stating that it is bullish on Bitcoin but shorting MSTR's stock.
The soaring stock price of MSTR has also raised concerns among other investors. From a fundamental perspective, MSTR's market cap is nearly three times the value of the Bitcoin it holds, meaning MSTR investors are effectively paying $250,000 for each Bitcoin, while the market price is less than $100,000.
The Wall Street View website mentioned the relationship between MSTR and Bitcoin:
The higher MSTR's stock price, the more stock CEO Michael Saylor can sell; the more stock he sells, the more Bitcoin he can buy; the more Bitcoin he buys, the higher the Bitcoin price goes; and when the Bitcoin price rises, MSTR's stock price will rise even more.
However, the music will eventually stop, and the dance will come to an end.
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