MicroStrategy (MSTR) Premium Analysis
Investment manager Kerrisdale Capital recently stated that shares of MicroStrategy (MSTR) are trading at an unjustifiable premium to the company’s actual Bitcoin holdings. This has raised concerns among analysts about the sustainability of MSTR’s current price.
The MicroStrategy Bitcoin Premium
Kerrisdale Capital expressed their position of being long on bitcoin and short on MSTR shares. They highlighted that the current implied Bitcoin price in MSTR shares is significantly higher than the spot price of Bitcoin in the market.
- MicroStrategy’s Balance Sheet: MicroStrategy’s balance sheet is primarily composed of Bitcoin, leading investors to view the company as a Bitcoin spot ETF.
- Competition in the Market: The emergence of actual Bitcoin spot ETFs in the market has increased competition for MicroStrategy, impacting its perceived uniqueness.
- Downside Risk: Kerrisdale Capital warned of a potential 50% downside in MSTR relative to Bitcoin if the premium contracts to a more historically consistent level.
MSTR Price Movement
Following the release of Kerrisdale’s report, MSTR shares experienced an 8% decline, while Bitcoin and other related companies saw mixed movements in the market.
- Performance Comparison: MSTR has significantly outperformed Bitcoin year-to-date, with both assets showing notable gains.
- MicroStrategy’s Bitcoin Holdings: The value of MicroStrategy’s Bitcoin holdings has more than doubled from their average purchase price, currently standing at over $15 billion.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
