Michael Saylor’s MicroStrategy Has Quintupled This Year. Now, a Formerly Bullish Analyst Thinks Its Time to Short the Stock.

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Michael Saylor’s company MicroStrategy (NASDAQ: MSTR) has arguably been the best-performing stock in the market this year, even outperforming many of the artificial intelligence darlings that have fueled the bull market. MicroStrategy is up roughly 518% this year.

Stocks that grow like a weed tend to attract short sellers who are constantly on the hunt for overvalued stocks, and today’s market likely has many candidates worthy of attention. Now, a formerly bullish analyst thinks MicroStrategy’s stock is way out of whack and believes it’s time to go short. Here’s why.

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Citron Research, run by Andrew Left, recently announced its short position. Citron’s main argument is that Bitcoin investing has become easier than ever with the advent of spot-Bitcoin exchange-traded funds (ETFs) and trading platforms like Coinbase and Robinhood.

MicroStrategy “has completely detached from BTC fundamentals,” Citron wrote on X. Interestingly, Citron said it is not short Bitcoin and had been very bullish on MicroStrategy four years ago when it called the company the ultimate way to invest in Bitcoin.

Saylor has since responded to the short report, claiming that many investors don’t understand MicroStrategy’s business model. Saylor says the company can borrow money with 6% interest rates and use it to purchase Bitcoin and make huge spreads. The company uses debt, various equity offerings, and convertible notes to fund Bitcoin purchases and make a substantial premium.

Citron is not the only firm to short MicroStrategy this year. Kerrisdale Capital, another short seller, announced a short position in March of this year, saying that “leverage cuts both ways” and that most shareholder value “has been overwhelmingly driven by simple bitcoin price appreciation.”

Although the shorts may be circling, MicroStrategy has become a battleground stock with some analysts seeing significant upside and the average price target suggesting over 29% upside, according to TipRanks. Benchmark analyst Mark Palmer recently reiterated his buy rating and raised his price target on MicroStrategy from $450 to $650. The stock currently trades around $382 (as of Nov. 27). Palmer takes the opposite view of Citron and Kerrisdale, suggesting that shareholders are not placing enough value on MicroStrategy’s ability to create shareholder value through its purchases of Bitcoin.

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