Microstrategy (NASDAQ:MSTR), an analytics firm that made a name for itself thanks to its massive hoard of Bitcoin (BTC-USD), recently saw its fortunes reverse significantly as short sellers reconsidered the notion that buying Microstrategy was almost as good a play as buying Bitcoin outright. The news sent shares down over 14% at one point, but in the closing minutes of Thursday’s trading, they rallied to be down only about 10%.
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The word came out of Kerrisdale Capital, which declared that it was not only short Microstrategy, but it was long Bitcoin. While certainly, Microstrategy made a good way to make a Bitcoin-adjacent play, that’s changed in recent days thanks to Microstrategy’s soaring value. Now, Kerrisdale notes, Microstrategy trades at an “unacceptable premium” and no longer serves as a “unique way to gain access to Bitcoin.”
This comes at a terrible time for Microstrategy overall, as there’s a rising short interest in crypto stocks in general. Microstrategy and Coinbase (NASDAQ:COIN) alone now account for 84% of crypto short interest, reports note.
Abandon Ship
This news is distressing enough, but it’s only made worse by some recent insider trading issues. Michael Saylor, Microstrategy’s executive chairman, has been selling shares rapidly. Several automatic sales recently kicked in, with 15 separate transactions in the last two weeks alone. And he’s not alone, either; right now, insider trading activity suggests an insider confidence level of “Very Negative” on the TipRanks insider trading tool.
Is Microstrategy a Good Investment?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSTR stock based on four Buys assigned in the past three months, as indicated by the graphic below. After a 509.44% rally in its share price over the past year, the average MSTR price target of $1,346.67 per share implies 21.4% downside risk.
