Citron Research claims that MSTR has essentially turned itself into a bitcoin investment fund. We have great respect for MSTR CEO Saylor, but even he must know that MSTR is overheated.
Written by: He Hao
Source: Wall Street Journal
On Thursday during U.S. trading, MicroStrategy (MSTR), a 'big holder of bitcoin,' saw its stock price plummet. Earlier, Citron Research's Andrew Left posted on social media platform X that he is shorting this software company, which has essentially turned itself into a bitcoin investment fund.
MSTR continued its previous surge on Thursday morning, with its stock price at one point rising 14.6% during the day, reaching a historic high of $543, but then rapidly fell, retreating more than 21% from the day's high and 10% from Wednesday's closing price.
Afterwards, MSTR's intraday decline narrowed, but continued to fall for more than an hour before the close, breaking below the morning low, with an intraday low that retreated more than an astonishing 31% from the day's high. Ultimately, MSTR closed down over 16%.
As of Wednesday's close, MSTR has risen 650% this year. As of Thursday's close, MSTR still has an increase of nearly 530% for the year.
Bitcoin broke through the $98,000 mark during trading on Thursday, hitting a new all-time high, which also boosted MSTR's stock price in the morning, pushing MSTR's market value above $100 billion, making it as valuable as the top 100 stocks in the S&P 500 index. MSTR's market value has also surpassed the combined market value of the world's two largest gold mining companies, Newmont Goldcorp and Barrick Gold.
Under the leadership of MSTR CEO Michael Saylor, the company has spent heavily to buy bitcoin, sometimes even financing through debt issuance, quickly rising with its 'bitcoin strategy.' MSTR has almost become synonymous with bitcoin, acting as a shadow stock of bitcoin. However, with the launch of bitcoin ETFs, investors can now buy those ETFs directly without having to invest indirectly through MSTR's stock.
Below is Citron's post on X:
Nearly four years ago, Citron was the first to tell readers that MicroStrategy (MSTR) is the ultimate way to invest in bitcoin, setting a target of $700.
Fast forward to today: MSTR has soared above $5000 (adjusted). Kudos to Michael Saylor for his visionary bitcoin strategy.
Now, as investing in bitcoin has become easier than ever, MSTR's trading volume has completely detached from bitcoin's fundamentals. While Citron remains bullish on bitcoin, we have hedged our position by shorting MSTR.
We have great respect for Saylor, but even he must know that MSTR is overheated.
MSTR did not immediately respond to Citron's comments above.
Citron's post about 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 betting against private prisons. In October, Left asked a judge to dismiss the SEC's 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, also made a similar suggestion, stating that they are bullish on bitcoin but shorting MSTR's stock.
The soaring stock price of MSTR has also raised concerns among some other investors. From a fundamental perspective, MSTR's market value is nearly three times the value of its bitcoin holdings, and MSTR investors are effectively paying $250,000 for each bitcoin, while the market price is less than $100,000.
The Wall Street Journal mentions the relationship between MSTR and bitcoin:
The higher the stock price of MSTR, the more shares CEO Michael Saylor can sell; the more shares he sells, the more bitcoin he can buy; the more bitcoin he buys, the higher the bitcoin price goes; when the bitcoin price rises, MSTR's stock price goes up even more.
However, the music always stops, and the dance will come to an end one day.
