The shorts are coming for MicroStrategy (NASDAQ:MSTR)and investors reacted accordingly on Thursday — well, at least one short seller, who made no secret of what he currently thinks of the tech company-turned-Bitcoin (CRYPTO:BTC) accumulator. As a result, MicroStrategy’s stock price fell at a double-digit rate, closing down more than 11%.
Sell Stock Now, Says Investment Firm
Kerrisdale Capital, a New York-based investment firm, released a report lambasting MicroStrategy while recommending investors go for Bitcoin.
Kerrisdale cheekily captioned the report “Know when HODLKnow When to FODL,” a play on words on the acronym “hold on for dear life” which is a favorite among crypto investors.
The company is short MicroStrategy and long Bitcoin, and it hasn’t minced words on the former. Due to the growing popularity of the leading cryptocurrency, shares of MicroStrategy have generally seen a strong rise of late.
Kerrisdale is uncomfortable with this, writing that
The bitcoin price currently implied by MicroStrategy’s action is now above $177,000, or two and a half times the spot price of bitcoin. The days when MicroStrategy stock represented a rare and unique way to access Bitcoin are long gone.
The investment firm also pointed out that MicroStrategy’s original business, software analytics, currently represents only 3% of its enterprise value.
MicroStrategy has not yet officially responded to the Kerrisdale report.
Closely related to Bitcoin
Short sellers tend to attract inordinate attention because they are often scathing in their criticism of the stocks they are shorting. Still, Kerrisdale makes several valid points about MicroStrategy, particularly about how the shares have been seen by some investors as a proxy for direct ownership of Bitcoin. The company remains heavily dependent on the performance of Bitcoin as it is essentially its major asset, a situation that might not sit well with many.
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Eric Volkman has positions in Bitcoin. The Motley Fool posts and recommends Bitcoin. The Mad Motley has a disclosure policy.
Why MicroStrategy stock fell 11% on Thursday was originally published by The Motley Fool
