MicroStrategy (MSTR) witnessed a significant surge in its share price, soaring over 20% during early trading hours in the United States on March 4. By midday, the stock managed to maintain a gain of more than 15%. Notably, MicroStrategy is an active investor in Bitcoin (BTC).
After closing at $1,079 on the previous trading day, MicroStrategy’s shares opened at $1,200 on March 4 and reached an intraday high of $1,339.
According to Andrew Kang, co-founder of Mechanism Capital, approximately 20% of the publicly available shares in MicroStrategy, amounting to around $3 billion, were locked into short positions. Kang explained that investors aimed to capitalize on the stock’s rising value compared to its net assets, assuming that the share price would eventually drop.
Kang cautioned that any miscalculation could result in a situation similar to the short squeeze experienced by GameStop (GME) in January 2021. In just two weeks, the GameStop share price surged by a staggering 1,500%. However, within a month, it plummeted from a high of over $81 to $13.
MicroStrategy recently expanded its Bitcoin holdings by purchasing an additional 3,000 BTC between February 15 and 25. Founder and chairman Michael Saylor revealed that the company acquired these coins at an average price of $51,813, totaling $155 million. As a result, MicroStrategy’s BTC holdings now stand at 193,000 BTC, purchased at an average price of $31,554, amounting to a total of $6.1 billion.
Considering the BTC price recorded on March 4, which reached $66,332, MicroStrategy’s Bitcoin holdings are currently valued at $12.8 billion.
Market observers were already optimistic about MicroStrategy’s prospects. In a market report published on February 27, investment banker Benchmark labeled MicroStrategy as a “buy” with a target price of $990. Benchmark also predicted that the upcoming BTC halving event would further boost MicroStrategy’s share price.
On February 20, Saylor expressed his commitment to continue buying Bitcoin indefinitely, asserting that it is technically superior to gold, real estate, and the S&P 500.
As of the time of writing, MicroStrategy’s shares were trading at $1,251, experiencing an increase of nearly 16% throughout the day.
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