Investment firm Kerrisdale Capital has described MicroStrategy shares as overvalued in its research report.
“We are long on Bitcoin and short on MicroStrategy shares, a proxy for the leading cryptocurrency. They trade at an unjustified premium to the digital asset that determines their value,” the firm’s analysts noted.
According to their observations, the software developer’s shares soared with the cryptocurrency market, but now “it’s too much.” Kerrisdale Capital expects to profit from short positions if MicroStrategy shares decline in value.
This week, the stock price of the firm founded by Michael Saylor reached a new high of $1909.5. The company’s market capitalization hit a new peak since March 2000 at $31.85 billion.
MicroStrategy holds 214,246 BTC — over 1% of the total issuance of digital gold. The value of the held bitcoins exceeds $15 billion. The company does not plan to sell the cryptocurrency in the near or long term.
Bitcoin ETFs Alter Market Landscape
Kerrisdale Capital’s critical arguments largely rest on the thesis of expanding market participants’ access to financial instruments serving as “proxy investments in Bitcoin.”
“The days when MicroStrategy shares represented a rare and unique way to access the leading cryptocurrency are long gone. Bitcoin is easily accessible through brokerage firms, crypto exchanges, and recently through ETP and low-fee ETFs,” the firm’s report states.
Kerrisdale Capital representatives also noted that they hold long positions in BlackRock’s IBIT and Fidelity’s FBTC instruments. The combined value of bitcoins in these ETFs has exceeded $17 billion.
Earlier in March, MicroStrategy additionally acquired 12,000 BTC. Shortly after, the company announced the issuance of $500 million in bonds to purchase more digital gold.