The “extraordinarily high” MicroStrategy stock price is driven by its debt-financed BTC holdings, the investment firm says.

MicroStrategy’s stock price, driven primarily by its Bitcoin (BTC) holdings, is “exceptionally high” and “unjustifiable,” claims investment firm Kerrisdale Capital.

Investors have inflated MicroStrategy’s premium due to the company’s BTC holdings. Most of this BTC was purchased through debt financing, equity-linked convertible bonds, and ATM stock offerings, the company said in an analyst note on March 28. memo.

He added that calling the company’s use of leverage to buy more BTC “intelligent” is faulty logic.

Bitcoin ETF Could Make MicroStrategy Redundant

spot release Bitcoin ETF (Exchange Traded Fund) could reduce the need for investors to trade MicroStrategy stock to gain exposure to Bitcoin, the company added.

MicroStrategy (MSTR) no longer offers investors “a rare and unique way to access Bitcoin,” the note said.

Kerrisdale Capital said MicroStrategy’s “dormant software analytics business” accounts for only 3% of the company’s total value. Other reasons defending the value of MSTR, including the ability to use the software company’s cash flow to buy more BTC, access to liquidity, lack of management fees, and the ease of trading MSTR, are all “weak.” A note has been added. So, analysts at the investment firm said, “We’re shorting MicroStrategy.”

Michael Saylor maintains a positive outlook on the company.

MicroStrategy CEO Michael Saylor has consistently expressed confidence in the company’s ability to remain attractive to investors. One of the reasons MicroStrategy has an advantage over spot Bitcoin ETFs, in addition to not charging fees, is the leverage it offers investors, Saylor said in a December interview with Bloomberg TV.

#bitcoin Better. pic.twitter.com/UkZR7t6UEP

— Michael Saylor⚡️ (@saylor) March 28, 2024

Recently, the CEO revealed that the company would be rebranded as a “Bitcoin Development Company.” He called it a “natural decision” in his Feb. 12 report. interview Building on MicroStrategy’s Bitcoin Success with CNBC invest.

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