Investment firm Kerrisdale Capital argues that with the approval of several spot Bitcoin exchange-traded funds (ETF) this year, there is now little incentive for investors to trade MicroStrategy stocks for exposure to Bitcoin (BTC).
Despite Kerrisdale Capital’s stance, MicroStrategy’s executive chairman Michael Saylor holds a different view. Kerrisdale Capital emphasized in a note on March 28 that the days when MicroStrategy shares were a unique way to access Bitcoin are long gone, and they believe that the MSTR price is currently overvalued. The firm disclosed that they have short positions on MicroStrategy stock.
Currently, MSTR is trading at $1,704, showing a 66.65% growth in the last month and a 419% increase over the past six months. On the other hand, Bitcoin’s price is at $70,849, with a 15.8% increase in the past month and a 163.31% surge over the last six months.
Kerrisdale Capital pointed out MicroStrategy’s rising debt-to-asset ratio and limited cash flow, which amounted to only $10 million in 2023 from its software analytics business. This accounted for just 3% of the company’s total enterprise value. Despite this, Saylor remains confident that MicroStrategy will continue to be an appealing option for investors.
Saylor has stated that his company provides a high-performance vehicle for investors who are bullish on Bitcoin, contrasting it with ETFs that charge fees and offer no leverage. He also announced that MicroStrategy is rebranding as a “Bitcoin development company,” emphasizing its significant Bitcoin holdings which have seen a 54% increase from last year.
Kerrisdale Capital remains bullish on Bitcoin, arguing that it offers greater direct value for investors compared to holding MSTR stock. The firm disclosed long positions in two new spot Bitcoin ETFs and suggested that shareholders may find more value in owning Bitcoin directly at this point.
Despite MicroStrategy’s stock showing significant growth over the past year, it saw a decline of approximately 11.18% on a specific day. MicroStrategy was unavailable for comment at the time of publication.
In other news, Bitcoin Man, X Hall of Flame, predicts that China will amplify the Bitcoin bull run, with Bitcoin reaching $1 million by 2028.