Since Donald Trump's victory, Bitcoin has repeatedly hit new highs, and the stock price of the Bitcoin whale MicroStrategy has also soared, unexpectedly attracting the attention of short-seller Citron Research, resulting in the stock price plummeting over 20% during Thursday's trading.
Citron Research, led by Wall Street's big short Andrew Left, stated that while they appreciate MicroStrategy's Executive Chairman Michael Saylor's vision of issuing debt to raise funds for Bitcoin purchases since 2020, they believe the stock has risen too much and is now overheated, emphasizing that they are shorting the stock.
Citron posted on social media platform X: 'Nearly 4 years ago, Citron was the first to tell readers that MicroStrategy was the ultimate way to invest in Bitcoin, setting a $700 target.'
The post also mentioned that investing in Bitcoin today is easier than it was 5 years ago, and one can also invest in Bitcoin spot ETFs or stocks related to Coinbase and Robinhood. The company pointed out:
Investing in Bitcoin is now easier than ever, and MicroStrategy's trading volume has 'completely detached from Bitcoin's fundamentals.' Although Citron remains optimistic about Bitcoin, we have taken a hedge by shorting MicroStrategy.
We have great respect for Michael Saylor, but even he must know that $MSTR is already 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. Fast forward to today: $MSTR has skyrocketed to over $5,000 (adjusted). Kudos to Michael Saylor for…
-- Citron Research (@CitronResearch) November 21, 2024
MicroStrategy's stock price has surged nearly 500% this year, exceeding Bitcoin's and the S&P 500 index's increases of 110% and 25%, respectively. On Wednesday alone, MicroStrategy surpassed SPDR S&P 500 ETF Trust (SPY) and Tesla to become the most traded stock of the day. The company's current price-to-book ratio has reached 3 times.
On Monday, MicroStrategy completed the largest Bitcoin purchase in history, adding 51,780 Bitcoins for approximately $4.6 billion. The Bitcoin currently held by the company is worth about $29.7 billion, with a total acquisition cost of approximately $16.5 billion, including fees and expenses, resulting in an average purchase cost of $49,874 per Bitcoin. The company's market cap is $80 billion.
MicroStrategy closed down 16.6% on Thursday to $397.28 per share; the current trading price of Bitcoin is about $99,000.
Completed $3 billion debt issuance
On the other hand, MicroStrategy announced that it has completed the issuance of $3 billion in debt to purchase more Bitcoin. The company previously stated it would issue convertible senior notes with a 0% interest rate maturing in 2029.
According to the company's statement, the bond issuance was completed within 3 days. MicroStrategy originally sought to raise $1.75 billion but ultimately expanded to $2.6 billion, and initial purchasers have the option to buy an additional $400 million in notes.
Despite the zero coupon, investors may still consider this bond, as its conversion rate is '1.4872 shares for every $1,000 principal,' which is equivalent to about $672 per share, a 55% premium over the company's recent stock price.
Like previous bond issuances, MicroStrategy plans to use these funds to purchase Bitcoin. Since 2020, when the company began investing in Bitcoin, investors have viewed this stock as an alternative to Bitcoin.
"Criticized for 'detaching from Bitcoin fundamentals'! 'MicroStrategy' was shorted by Citron, with the stock price once dropping 20%." This article was first published on (Blockke).
