Direct investment in Bitcoin ETF is a better choice! MicroStrategy is shorted by Citron Research

Zhitong
2024.11.21 22:18
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MicroStrategy's stock price fell sharply by 16.16% to close at $397.28 due to short selling by Citron Research. Citron stated that MicroStrategy's valuation is overheated and pointed out that investing in Bitcoin has become more convenient through ETFs and other means. MicroStrategy is the world's largest corporate holder of Bitcoin and plans to raise $21 billion by 2027 to purchase Bitcoin

According to Zhitong Finance APP, on November 16, MicroStrategy (MSTR.US) saw its stock price plummet by 16.16%, closing at $397.28, down 26% from the historical high of $543 reached during the day. This was due to the short-selling firm Citron Research stating on the social platform X (formerly Twitter) that it had shorted MicroStrategy while holding a long position in Bitcoin.

The firm mentioned in its statement: "We have great respect for Michael Saylor, but even he must realize that MicroStrategy's valuation has become overheated." Michael Saylor is the chairman and controlling shareholder of MicroStrategy and a key proponent of the company's aggressive Bitcoin acquisition strategy.

Citron also pointed out that it was a supporter of MicroStrategy back in 2020, when it viewed the company as the best way to invest in Bitcoin. However, now that Bitcoin investment has become more convenient, whether through ETFs or trading platforms like Coinbase (COIN.US) and Robinhood (HOOD.US), MicroStrategy's trading volume has completely detached from the fundamentals of Bitcoin.

MicroStrategy is the world's largest corporate holder of Bitcoin, currently holding over 331,200 Bitcoins, accounting for 1.5% of the global circulating supply. Since November 5, its stock price has doubled, far exceeding Bitcoin's 40% increase, with Bitcoin's current price nearing the historical high of $100,000.

The company launched its "21/21" aggressive accumulation strategy in October 2023, planning to raise $21 billion through equity and debt financing by 2027 to purchase Bitcoin. Just this month, the company has raised $6.6 billion through equity issuance and $2.6 billion through convertible bonds, with total bond size expected to increase to $3 billion.

Despite the attention garnered by MicroStrategy's strategy, its market capitalization has soared to $107 billion alongside the surge in its stock price. The value of the company's Bitcoin holdings is approximately $32 billion, meaning MicroStrategy's current valuation is 3.5 times its Bitcoin assets. By the end of 2023, the stock's trading price is expected to be close to the actual value of its Bitcoin holdings.

MicroStrategy's success heavily relies on the high premium level of its stock price over Bitcoin. If the company cannot maintain or expand this premium, its stock performance may struggle to surpass the returns of Bitcoin itself.

Citron Research noted in its statement that with the launch of Bitcoin ETFs (such as iShares Bitcoin Trust), investors may find that directly investing in ETFs is a better option

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