Bitcoin is Digital Energy - Michael Saylor at the MIT Bitcoin Expo 2-18 screenshot
Michael Saylor's MicroStrategy is has been riding the tide in Bitcoin's recent bull run. YouTube Screenshot/MicroStrategy Official YouTube Channel

KEY POINTS

  • Kerrisdale noted that "things have gotten carried away" during the Bitcoin bull run
  • It said MSTR was trading "at an unjustifiable premium" to BTC, which drives the stock's value
  • Despite MSTR's Thursday slump, the stock is still up year-to-date by 150%

Bitcoin maximalist Michael Saylor's MicroStrategy dropped as much as 14% Thursday after investment management firm Kerrisdale Capital said it was "short" on the business intelligence company, citing a potential overpricing of the MSTR stock.

"We are long Bitcoin and short shares of MicroStrategy, a proxy for Bitcoin which trades at an unjustifiable premium to the digital asset that drives its value," Kerrisdale said right at the beginning of its report published Thursday.

"Shares of MicroStrategy have soared amid a recent rise in the price of Bitcoin but, as is often the case with crypto, things have gotten carried away," Kerrisdale said in its short selling report. Short selling is a trading strategy wherein investors bet against a stock by selling borrowed stocks, hoping to buy back the shares for a lower price.

Kerrisdale pummeled the stock further, saying MSTR is "two and a half times the spot price of Bitcoin," but such a price is supposedly unreasonable since gone were the days when Tysons-based MicroStrategy "presented a rare, unique way to gain access" to the world's largest cryptocurrency by market cap.

It noted that BTC can now be easily obtained through various channels such as crypto exchanges and brokerages. "None of the reasons commonly provided for MicroStrategy's relative attractiveness justify paying well over double for the same coin," it argued.

MicroStrategy shares dived as much as 14% Thursday following the prominent short seller's report, but the stock remains up on a staggering 150% year-to-date.

Some traders and Bitcoiners seem unfazed about the short seller's report, as the crypto community on X (formerly Twitter), with some saying the report only pushed them to purchase more MSTR. "There's the reason nobody has heard of Kerrisdale Capital," one user said.

Kerrisdale's bearish view of the MSTR stock comes just more than a week after MicroStrategy acquired 9,245 more Bitcoin, bringing its total BTC holdings to 214, 246. MicroStrategy remains the world's known largest corporate holder of the world's first decentralized cryptocurrency and it has also announced it will transition into a "Bitcoin development company."

Last month, Saylor said it was only "natural" for MicroStrategy to make the transition since majority of the company's enterprise value is now based on its highly successful Bitcoin strategy. He went on to explain that in the rebranding, MicroStrategy will develop software "in order to accumulate more Bitcoin for our shareholders, and also to promote the growth of the Bitcoin network."

Meanwhile, BTC holds steady at around $70,000 following last week's slump in the lows of $62,000.

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