How MicroStrategy’s bull run is crushing short sellers

Michael Saylor’s MicroStrategy is on a tear, making waves in the stock market and putting a serious dent in the pockets of those betting against it. The company, known for its love of Bitcoin, has seen its shares skyrocket, tripling in value this year alone. This surge comes as Bitcoin hits new all-time highs, turning the tables on short sellers who’ve been caught off guard by the unexpected rally.

As it stands, those wagering on a downfall for MicroStrategy are staring down the barrel of a whopping $3.3 billion in paper losses for 2024, thanks to the stock’s 170% climb. This financial bloodbath has been a year in the making, with total losses over the past 12 months breaching the $4.3 billion mark.

MicroStrategy’s Rollercoaster Ride

Betting against MicroStrategy might have seemed like a smart move, especially considering the company’s risky bet on Bitcoin. But as the numbers show, what was once considered a gamble has turned into a nightmare for short sellers. Larry Tentarelli points out the high stakes of shorting MicroStrategy. The company’s shares took a nosedive of over 20% in a single day early in March after announcing a sale of convertible notes aimed at purchasing more Bitcoin.

The company’s audacious strategy has sparked a frenzy that could lead to even more financial crisis for short sellers. A phenomenon known as a short squeeze could be on the horizon, forcing these traders to buy back shares at higher prices to cover their losses, further inflating the stock price. And this outcome could happen any moment now, especially with MicroStrategy’s available shares for trading, or float, sitting comfortably high at over 22%. This is actually a common thing among cryptocurrency-linked stocks.

Betting Big on Bitcoin

Wall Street analysts are taking note of MicroStrategy’s bullish run, revising their price targets upward in response to the company’s aggressive Bitcoin acquisition strategy. With Canaccord Genuity setting the bar high at a street-high price target of $1,810, it’s clear the tide is turning in favor of the software maker. This vote of confidence is backed by MicroStrategy’s continued investment in Bitcoin, with the company recently pouring an additional $822 million into the cryptocurrency, capitalizing on its all-time high price of over $73,000.

Analysts, including Cowen’s Lance Vitanza, are suggesting that MicroStrategy’s stock offers an attractive option for those looking to test out Bitcoin without direct investment. The company’s relentless pursuit of Bitcoin, recently highlighted by its announcement of yet another proposed sale of convertible senior notes to fund further cryptocurrency purchases, cements its position as the largest corporate holder of Bitcoin.

MicroStrategy’s treasury now boasts over 205,000 Bitcoins, valued at more than $15 billion, underscoring its unwavering commitment to the Bitcoin.