One of today’s biggest movers is MicroStrategy (NASDAQ:MSTR) stock. A tech player turned Bitcoin (BTC-USD) holding company, this closely watched name has seen meteoric gains this year. At the time of this writing, MSTR stock is down nearly 10% today but still up a whopping 150% year-to-date (YTD).
So, the story around MicroStrategy is certainly interesting to follow. And, notably, today’s move comes as Bitcoin continues to ascend, up more than 2% over the past 24 hours to around $70,500 per coin.
The key catalyst for today’s decline in MSTR stock is a short report announced by Kerrisdale Capital on X (formerly Twitter) this morning. As InvestorPlace covered earlier today, there are some pretty interesting core factors the report takes into consideration, with a particular focus on MicroStrategy’s valuation.
Let’s dive further into the report and what investors should watch for moving forward.
MSTR Stock Declines on Short Seller Report
After MicroStrategy’s incredible rise this year, some short sellers were bound to start paying attention to what the company should really be worth. Viewed largely as a Bitcoin holding company, with more than 214,000 BTC held on its balance sheet (and more likely to be added with recent debt raises announced), MicroStrategy’s share price should be tied directly to the price of Bitcoin.
The thing is, these short sellers are now alleging that MicroStrategy’s valuation has deviated from its intrinsic value, based on how its Bitcoin is currently being valued by the market. According to the Kerrisdale report, investors are now valuing the company’s balance sheet at more than double what the company’s Bitcoin holdings are worth, placing a value of roughly $177,000 per coin on its digital asset holdings.
Some deviation between the company’s holdings and where investors expect Bitcoin prices to be headed may make sense. But this is a rather large discrepancy. Today, many market participants appear to be attempting to recreate this bottom-up valuation approach and may be coming to the conclusion that the rally has been too much, too fast.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
