“Microstrategy is built different. And I mean that in the worst way possible”-Andrew Left, probably

Well, Andrew Left is at it again. The man who once swore off shorting stocks after getting trained by the GameStop army has decided to dust off his contrarian playbook. His latest target? MicroStrategy—the software company that’s less about software these days and more about hoarding Bitcoin. Apparently, Left says the stock is running way too hot, and frankly, he might have a point.

(Source: Giphy) 

In short, (pun intended) MicroStrategy isn’t exactly subtle about its pivot. It’s not so much a software company anymore as it is Michael Saylor’s personal Bitcoin war chest. Since 2020, the company has gone all-in on Bitcoin, buying up 331,200 BTC at an average price of about $49,874 per coin. That’s billions of dollars in crypto sitting on the books.

And it’s worked—at least so far. With Bitcoin recently hitting $98,000, MicroStrategy’s stock has skyrocketed, up over 500% this year. Investors have treated it like a Bitcoin ETF on steroids, sending the stock into orbit. But even with the melt-up, not everyone is buying it.

Andrew Left, founder of Citron Research, announced a short position in MicroStrategy this week, arguing that the stock has become completely detached from Bitcoin’s fundamentals. The kickoff to this, was when Left basically threw hands in a X post that stated: “Much respect to @saylor, but even he must know $MSTR is overheated,” Now what’s funny is Citron is actually bullish on Bitcoin itself, but Left thinks MicroStrategy has gone a step too far. The stock, he argues, is acting like it owns more Bitcoin than it actually does.

(Source: Benzinga) 

What’s more, is that Left isn’t alone in his thinking. For instance, Doug Kass of Seabreeze Capital Partners also shorted MicroStrategy this week, calling the stock overvalued. Kass even managed to lock in some quick profits, covering parts of his position as the stock started to slide.

So, why the sudden skepticism? Well, MicroStrategy used to have a pretty clear value proposition. If you wanted exposure to Bitcoin but didn’t want to deal with the hassle of crypto wallets or exchanges, you could just buy $MSTR and call it a day. It was an easy, albeit expensive, way to bet on Bitcoin’s rise. But now? Bitcoin ETFs exist. Investors can get direct exposure to Bitcoin without paying a premium for a company that also claims to make software. That makes MicroStrategy... well, kind of a “has been”. 

(Source: Bloomberg) 

Plus, let’s not forget how MicroStrategy has bankrolled its Bitcoin shopping spree: debt and dilution. The company has raised billions through equity and debt offerings to keep buying Bitcoin, and while that’s worked during the bull run, it’s not exactly a low-risk strategy. If Bitcoin stumbles—or even just stops climbing at its current cashin’ checks and snappin’ necks speed—MicroStrategy and its shareholders could find themselves at the bottom of a barrel. 

Which is why after Left’s short call, MicroStrategy share’s plunged 16%, marking their worst day since April. But, but, but… even with that drop, the stock is still up 598% this year. However, the cracks are starting to show. (It’s amazing what comes about when someone puts a short hit on ya? Looking at you, Super Micro). 

(Source: Giphy) 

In the end though, MicroStrategy is still the boldest Bitcoin play on Wall Street, and Michael Saylor remains one of crypto’s loudest evangelists. But as more investors question the stock’s fundamentals—and as Bitcoin ETFs offer cleaner alternatives—MicroStrategy may find it harder to justify its fat valuation. 

For now, Left is betting that the stock’s senseless rise is due for a reality check. Whether he’s right or not, one thing’s for sure: this isn’t a stock for no sissy’s. In the meantime, do what you will with that, and as always stay safe and stay frosty, friends! Until next time…

P.S. I’ll be honest, I’m not one to overhype things, but here’s the deal: The next alert we’ll be dropping this week? It’s a game-changer. And if you miss out, well, it could be costly. Click here ASAP for the details. 

Stocks.News does not hold positions in companies mentioned in the article.