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Kerrisdale Capital Deems MicroStrategy Overvalued Amid Bitcoin Surge

Kerrisdale Capital, an investment firm, has raised concerns over the valuation of MicroStrategy’s shares, suggesting that they are currently overvalued.

In its latest report, Kerrisdale Capital argues that MicroStrategy’s shares have experienced a surge primarily driven by the recent uptick in Bitcoin prices. However, the firm believes that the market sentiment surrounding MicroStrategy’s shares has become overly optimistic, reflecting a disconnect from the underlying fundamentals.

“We are long bitcoin and short shares of MicroStrategy, a proxy for Bitcoin which trades at an unjustifiable premium to the digital asset that drives its value,” stated experts at Kerrisdale Capital.

The report highlights the evolution of investor access to financial instruments offering exposure to Bitcoin, indicating that MicroStrategy shares no longer serve as a unique or exclusive avenue for such exposure. According to Kerrisdale Capital, the days when MicroStrategy shares represented a distinctive pathway to Bitcoin investment are now a thing of the past.

“Bitcoin is now easily obtainable through brokerages, crypto exchanges, and more recently low fee ETPs and ETFs,” the experts added.

Despite Kerrisdale Capital’s skepticism, MicroStrategy continues to pursue its aggressive Bitcoin accumulation strategy. The company recently disclosed its possession of approximately 214,250 Bitcoins, constituting around 1% of the total cryptocurrency supply. MicroStrategy utilized profits from previously issued convertible bonds maturing in 2031 to finance its initial Bitcoin purchases.

MicroStrategy’s market capitalization has surged to new heights, exceeding $31.85 billion, as Bitcoin’s price rallied above $70,000. According to data from Companies Market Cap, MicroStrategy now ranks 606 among the largest companies globally by market capitalization.

The American software company, renowned as one of the largest public holders of Bitcoin, has witnessed its share price skyrocket by 200% since the start of the year, reflecting the fervor surrounding its Bitcoin investment strategy.

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