MicroStrategy’s Implied Premium to Bitcoin Settling Into New Norm, BTIG Says

Shaurya Malwa


“The premium is supported by a desire for investors to have exposure to bitcoin who may be unable to invest directly in bitcoin or in exchange-traded funds (ETFs), and also supported by MSTR’s ability to accretively raise capital to purchase additional bitcoin for shareholders,” the authors wrote. Due to the company’s capital market activity it now has greater exposure to bitcoin on a per-share basis, the report noted. MicroStrategy is expected to benefit from bitcoin catalysts in the coming year, such as the upcoming halving event, which is expected to take place later this month, BTIG said. The quadrennial halving is when miner rewards are slashed by 50%, thereby reducing the rate of growth in bitcoin supply. The software company’s shares fell as much as 14% last Thursday after prominent short seller, Kerrisdale Capital, said in a report that is short-selling the stock while betting long on bitcoin. The Kerrisdale report noted that the bitcoin price currently implied by MicroStrategy’s share price is $177,000, which is two and half times the spot price of the cryptocurrency. None of the reasons cited for the stock’s relative attractiveness “justify paying well over double for the same coin,” the report added. Kerrisdale isn’t the only equity investor shorting shares of MicroStrategy. Total short interest in crypto stocks is $10.7 billion, with MicroStrategy and Coinbase (COIN) making up 84% of the bearish bets, according to a recent report from S3 Partners. Read more: Crypto Stocks Like MicroStrategy, Coinbase Could Shoot Up If Short Sellers Exit


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