Why MicroStrategy stock fell 11% on Thursday

Shorts are coming micro strategy (NASDAQ: MSTR)investors responded accordingly on Thursday – with at least one short seller making no secret of his current views on the tech company’s transformation –Bitcoin (Cryptocurrency: BTC) As a result, MicroStrategy shares fell by double digits, closing down more than 11%.

Investment firms say they’re shorting stocks now

New York City-based investment firm Kerrisdale Capital released a report lambasting MicroStrategy while recommending investors go long on Bitcoin.

Chrisdale shamelessly subtitled the report “Knowing When long term holdingKnow When to FODL,” a play on cryptocurrency investors’ favorite acronym for “hold on for dear life.”

The company is short MicroStrategy, long Bitcoin, and has been unabashedly short MicroStrategy, whose shares have generally surged recently amid the surge in popularity of the leading cryptocurrency.

Kerrisdale felt uncomfortable with this, writing

The current implied Bitcoin price for MicroStrategy stock is now over $177,000, which is twice and a half Bitcoin spot price. Long gone are the days when MicroStrategy stock represented a rare, unique way to acquire Bitcoin.

The investment firm also pointed out that MicroStrategy’s original software analytics business currently accounts for only 3% of its enterprise value.

MicroStrategy has yet to formally respond to Kerrisdale’s report.

Close integration with Bitcoin

Short sellers tend to receive outsized attention because they often harshly criticize the stocks they short. Kerrisdale made some valid points about MicroStrategy, however, particularly regarding how some investors view the stocks as representing direct Bitcoin ownership. Still relying heavily on Bitcoin’s performance as it is absolutely its primary asset, this situation may make many people uncomfortable.

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Eric Volkman Take a Bitcoin position. The Motley Fool holds a position in and recommends Bitcoin. Motley Fool owned disclosure policy.

Why MicroStrategy stock fell 11% on Thursday Originally published by The Motley Fool

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