Significant Bets Placed on MicroStrategy Stocks
Big shorters have made substantial investments in Michael Saylor’s business intelligence and software company, MicroStrategy, by selling stocks worth around $6.9 billion. Despite the large short positions, MicroStrategy stocks (MSTR) have continued to climb, exceeding investor expectations.
Loss of Confidence Among MicroStrategy Short Sellers
MicroStrategy short sellers are currently losing confidence as the value of MSTR stocks has surged over the past six months. The software intelligence company holds short positions totaling $6.9 billion, which is 23.14% of its market capitalization of nearly $30 billion.
Short selling is a trading strategy where investors speculate on a stock’s potential decline. These investors, known as shorters, borrow shares and sell them in the hope of a decrease in price, allowing them to repurchase at a lower cost for profits.
MicroStrategy’s stock has not seen a significant drop since the beginning of the year. Specifically, MSTR stocks have increased by approximately 190.08% over the past six months.
Various institutions are still anticipating a decline in MSTR’s price to capitalize on profits. The significant financial commitment and risks associated with shorting MicroStrategy could pose a threat to several investors if the stock price does not drop.
Additionally, the tripling of MSTR stock value from $570 in December to $1,656 has made current short positions extremely costly. Further increases in stock prices may put short sellers in a vulnerable position, potentially leading many to exit trades early to mitigate larger losses.
Fintel, a provider of financial data and insights, has revealed a list of significant shorts, outlining the largest disclosed short positions by institutions to the United States Securities and Exchange Commission (SEC). According to the data, MicroStrategy’s largest net short position amounts to around $2.4 billion.
MicroStrategy’s significant short position also ranks as the 27th largest among other institutions. The SPDR S&P 500 ETF Trust currently holds the top position, with over $114 billion in net shorts.
Update on MicroStrategy Stock Price
Apart from short sellers, other investors are also making substantial bets, with MicroStrategy founder and former Chief Executive Officer (CEO), Michael Saylor, placing significant wagers on Bitcoin in recent years.
In January 2024, Saylor announced that he was selling shares to acquire more Bitcoin. This decision follows numerous Bitcoin purchases, positioning MicroStrategy as the leading holder of Bitcoin among public companies, as reported by CoinGecko. As of May 1, 2024, the software company held a staggering 214,400 BTC, valued at $15.2 billion, representing more than 1% of Bitcoin’s total circulating supply.
Furthermore, in a year, MSTR stocks have risen by over 469.66%, driving the price up to $1,656.63, as of the latest data. Google Finance data indicates that the stock value continues to appreciate. In the last five days, MSTR has increased by 3.67%, and over the last month, it has gone up by 31.75%.
Featured image created with Dall.E, chart from Tradingview.com
