Summary
TLDR: MicroStrategy’s premium is supported by investors seeking exposure to bitcoin and the company’s ability to raise capital to purchase more bitcoin. The upcoming halving event may benefit the company, but a recent report from Kerrisdale Capital has caused the stock to fall. Kerrisdale is short-selling the stock while betting long on bitcoin, noting that the implied bitcoin price in MicroStrategy’s share price is significantly higher than the spot price. Other equity investors are also shorting MicroStrategy shares, with total short interest in crypto stocks at $10.7 billion.
Key Points
1. MicroStrategy’s premium is driven by investors seeking exposure to bitcoin indirectly, as well as the company’s ability to raise capital for additional bitcoin purchases.
2. The upcoming halving event is expected to benefit MicroStrategy, as it will reduce the rate of growth in bitcoin supply.
3. Short sellers, including Kerrisdale Capital, are betting against MicroStrategy’s stock, with total short interest in crypto stocks reaching $10.7 billion.