A 14% plunge! A bearish report sent "Bitcoin shadow stock" MSTR crashing down

Wallstreetcn
2024.03.29 08:29
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Renowned short-selling institution Kerrisdale Capital announced a short position on MicroStrategy, citing the latter's stock valuation as too high. With more diverse and convenient ways to invest in Bitcoin, the value of MSTR stock's "unique access to the cryptocurrency market" has been greatly discounted

The world's largest publicly traded company holding Bitcoin, MicroStrategy (MSTR), has been targeted by major short sellers, causing its stock price to plummet by 14% in Thursday's U.S. stock market.

The well-known short-selling institution Kerrisdale Capital stated in its latest report that they are shorting MicroStrategy, citing the reason that the latter's stock valuation is too high.

As Bitcoin continues to hit new historical records, MicroStrategy's stock price has been soaring, with a cumulative increase of over 200% so far this year.

Kerrisdale Capital points out that this excessive inflation is unreasonable, and as a representative of Bitcoin, MicroStrategy's stock price increase has far exceeded that of other digital assets.

The common reasons for MicroStrategy's relative attractiveness are not enough to justify paying more than double the price for the same coin.

MicroStrategy's trading history and basic knowledge indicate that the current premium will decrease, providing a convincing opportunity for adjustment as seen in previous cases.

The report also emphasizes that as the avenues for investing in Bitcoin become more diverse and convenient (such as the Bitcoin spot ETF launched in January), the value of MicroStrategy's stock providing "unique access to the cryptocurrency market" has been greatly discounted.

MicroStrategy currently holds approximately 214,246 Bitcoins, and its significant investment in crypto assets has indeed made the company a prominent focus in the market.

However, Kerrisdale Capital believes that the market's overvaluation of MicroStrategy lacks sufficient basis, especially in the face of various low-cost Bitcoin financial products (such as ETFs and ETPs) currently available.

The market is becoming increasingly cautious towards MicroStrategy and the entire cryptocurrency industry. According to data from S3 Partners, the current scale of shorting cryptocurrency-related shares has reached $10.7 billion, with MicroStrategy and Coinbase being the primary targets of short selling, accounting for approximately 84% of the total

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