Short-selling institution Kerrisdale Capital released a research report on Thursday, criticizing the overvaluation of the stock price of MicroStrategy, a U.S. listed company and dominant holder of Bitcoin, and announced that they are shorting MicroStrategy stock. Following the report, MicroStrategy’s stock price plummeted by over 11% on Thursday.
Kerrisdale Capital stated in the research report that they are long on Bitcoin but short on the stock of MicroStrategy, suggesting that MicroStrategy’s stock is an alternative investment to Bitcoin and its price has an unreasonable premium compared to the value driven by Bitcoin.
Kerrisdale Capital pointed out that the implied Bitcoin price in MicroStrategy’s stock has exceeded $177,000, which is 2.5 times the current price of Bitcoin. With the approval and launch of Bitcoin spot ETF since January, the total trading volume has far exceeded $150 billion, attracting $18.3 billion in net inflows. Kerrisdale Capital disclosed that they hold long positions in Bitcoin spot ETFs from BlackRock and Fidelity.
MicroStrategy is continuing its corporate strategy of accumulating Bitcoin, currently holding 214,246 Bitcoins, accounting for 1% of the total Bitcoin supply. The cost of holdings is $7.53 billion, with the current holding value at $15.08 billion, resulting in an unrealized profit of approximately $7.55 billion.
After the release of the report, MicroStrategy’s stock price experienced a sharp decline on Thursday, initially dropping by $273.64 or 14.3% to $1,645.52 and closing at $1,704.56, down by $214.60 or 11.18%. Despite the drop on Thursday, MicroStrategy’s stock price has still surged by 169.87% year-to-date.
Kerrisdale is not the only investor shorting MicroStrategy stock, according to a previous report by S3 Partners, the total short positions in cryptocurrency-related stocks amount to $10.7 billion, with MicroStrategy and Coinbase accounting for 84% of these short positions.