MicroStrategy's Bitcoin Exposure Losing Appeal Following Bitcoin ETF Approvals, Says Kerrisdale Capital
Summary:
Investment firm Kerrisdale Capital asserts that the need for investors to trade MicroStrategy stocks for Bitcoin exposure is declining due to the approval of various Bitcoin ETFs. Despite MicroStrategy's rising stocks and Bitcoin holdings, Kerrisdale calls out its growing debt-to-asset ratio and limited cash flow. The firm is bullish on Bitcoin and holds long positions in two newly approved Bitcoin ETFs, asserting that owning Bitcoin directly offers better value to shareholders than holding MicroStrategy stock. Despite this, MicroStrategy's Chairman, Michael Saylor, remains confident in his company's attractiveness to Bitcoin investors.
Investment firm Kerrisdale Capital asserts that the relevance of trading MicroStrategy stocks to access Bitcoin (BTC) is declining following this year's approval of various Bitcoin spot exchange-traded funds (ETF). However, this notion is likely to be contested by MicroStrategy's executive chairman, Michael Saylor. "MicroStrategy shares are no longer a prime option for Bitcoin exposure," stated Kerrisdale Capital in a March 28 analysis note, asserting the belief that the price of MSTR is inflated. The firm also disclosed that it holds short positions on MicroStrategy stock. Currently, MSTR is trading at $1,704 with an impressive growth of 66.65% in the past month and nearly 419% over the last six months.
Additionally, despite the substantially high price of Bitcoin, now at $70,849, which has climbed by 15.8% in the last month and by 163.31% over the previous six months, MicroStrategy’s shares have skyrocketed as well. It's worth noting, however, that MicroStrategy's debt-to-asset ratio is growing and its cash flow is limited, only $10 million in 2023, only accounting for 3% of the company's total value from its core software analytics segment.
Saylor, on the other hand, remains assured that MicroStrategy will continue to be an alluring investment option. He maintains that his company presents a high-performing alternative for investors with a long position in Bitcoin. He stated in a February interview with CNBC that the company's rebranding as a “Bitcoin development company” is a strategic move in line with their Bitcoin-focused approach.
As the largest public Bitcoin holder, MicroStrategy currently possesses 214,246 Bitcoin, a substantial increase from its 138,955 Bitcoin holdings last year. Saylor feels that as a functioning company, MicroStrategy has better management control over operations and capital than an investment trust.
Kerrisdale Capital remains optimistic about Bitcoin as it provides superior direct value for investors. It expressed concerns over the implications of MSTR's current price on Bitcoin – currently suggesting a Bitcoin price of $177,000, which is over double its real price. The company has long positions in two newly approved spot Bitcoin ETFs – the iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC). Kerrisdale believes that owning Bitcoin directly would be more beneficial to shareholders than possessing MSTR stock.
Despite the remarkable growth in MicroStrategy's stock over the past year, it fell by approximately 11.18% on the day. MicroStrategy was approached for a comment but had not responded at the time of publication.
Published At
3/29/2024 6:36:17 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.