"Bitcoin leader" MSTR continues to surge, with a year-to-date increase of over 5 times, equivalent to investors paying $250,000 for each coin

"Bitcoin Leader" MicroStrategy's Stock Soars, But It's Too Expensive.

On Monday, MicroStrategy's stock price surged nearly 26% to $340 per share, reaching an all-time high. Earlier on Monday, MicroStrategy disclosed that the company raised approximately $2 billion through the issuance of new shares from October 31 to November 10, and purchased 272,000 bitcoins, further solidifying its position as the world's largest corporate holder of bitcoin, with a total of 279,420 bitcoins.

Currently, under the leadership of Chairman and controlling shareholder Michael Saylor, MicroStrategy's strategy has been to raise funds through stock and debt issuance to purchase large amounts of bitcoin. In its financial report at the end of October, the company disclosed that management plans to raise $42 billion between 2025 and 2027, primarily to further increase its bitcoin holdings.

However, despite the rise in MicroStrategy's stock price, investing in its shares remains relatively expensive compared to the amount of bitcoin the company holds—MicroStrategy's market capitalization is three times the value of its bitcoin holdings, approaching a historical high premium, while at the end of 2023, this ratio was only about 1 time.

According to estimates by Barron's, MicroStrategy currently holds about 1% of the world's circulating bitcoin, with its 279,420 bitcoins currently valued at approximately $24 billion, while the company's market capitalization is about $72 billion. This means that MicroStrategy's investors are effectively paying $250,000 for each bitcoin, while the market price is only around $80,000.

Analysts believe that the recent surge in MicroStrategy's stock may be partly driven by short covering. Currently, there are about 30 million shares shorted, accounting for 16% of the float, and some investors may have adopted a strategy of going long on bitcoin and shorting MicroStrategy, hoping to narrow the premium between the two. However, MicroStrategy's recent performance has outpaced bitcoin, forcing these arbitrage investors to cover their short positions.

For cryptocurrency market investors, due to the high premium of MicroStrategy's stock compared to bitcoin, ETFs like iShares Bitcoin Trust may become a better investment choice, which could lead to a narrowing of MicroStrategy's stock premium and underperformance relative to bitcoin.

Since the beginning of this year, MicroStrategy's stock price has increased more than fivefold, while the price of bitcoin has doubled, currently reported at $87,728.82 per bitcoin.