MW MicroStrategy's stock turns south to snap long streak of double-digit gains
By Tomi Kilgore
The bitcoin play's stock surged again into record territory, then reversed sharply lower after a well-known investor's bearish call
Shares of MicroStrategy Inc. swung from sharp gains to a big loss Thursday, after a well-known investor said he was betting against the software company and cryptocurrency play as a hedge against his continued bullish bet on bitcoin.
MicroStrategy's stock $(MSTR.AU)$ was surging as much as 14.6% to an all-time intraday high of $543 as the opening bell rang, as bitcoin (BTCUSD) is fast approaching a $100,000 milestone amid continued crypto exuberance since Donald Trump won the U.S. presidential election.
But soon after the opening bell, the stock pulled a sharp U-turn and fell into negative territory.
The stock tumbled 16.2% to close Thursday at $397.28, suffering its biggest one-day selloff since it plunged 17.6% on April 30. The shares also snapped a three-day streak of double-digit percentage gains, which was their longest such streak since a four-day stretch that ended on June 9, 2000. There had been 13 instances of back-to-back double-digit gains in between.
The reversal appeared to be timed with a post on X, formerly known as Twitter, in which Citron Research said that while it remains bullish on bitcoin, it has taken a short position on MicroStrategy's stock - a bet that prices will fall - as a hedge against its bitcoin bet.
Before Thursday's sharp reversal, MicroStrategy's stock had shot up 39.1% over the previous three sessions as bitcoin continued to reach record highs. The two assets have been linked since MicroStrategy said in 2020 that it had adopted bitcoin as its primary treasury reserve asset.
Citron was a well known short seller, who gained notoriety for calling out Valeant Pharmaceuticals in 2015 as an extremely leveraged company that falsely claimed revenue.
See related: Short sellers are not evil, but they are misunderstood.
He was then part of the short-squeeze that turned GameStop Corp. into a "meme" stock in early 2021, at which time Citron founder Andrew Left said he would no longer write short-selling reports.
Left resurfaced in the news this year, when he said in May he was again shorting GameStop's stock, and when the U.S. Securities and Exchange Commission charged Left and Citron in July with misleading investors by publishing false statements about his trades.
Meanwhile, bitcoin continued its march higher toward a third-straight record close on Thursday.
Bitcoin's exuberance has been fueled this week as Trump said he plans to nominate crypto-friendly Howard Lutnick to be his commerce secretary and as the Nasdaq started to allow options trading on BlackRock's iShares Bitcoin ETF IBIT for the first time. The ETF rose 4.1% on Thursday.
Read: Crypto traders are betting on bitcoin at $174,000 in 2026. What options on BlackRock's bitcoin ETF tells us.
In addition, reports surfaced that Trump Media & Technology Group Corp. $(DJT)$, the parent of Trump's Truth Social social-media platform, was near a deal to buy cryptocurrency platform Bakkt Holdings Inc. $(BKKT)$, which Bakkt declined to comment on.
Among other bitcoin plays, shares of Mara Holdings Inc. $(MARA)$, formerly known as Marathon Digital, climbed 6.9% on Thursday, while Coinbase Global Inc.'s stock $(COIN)$ dropped 7.7% and Robinhood Markets Inc. shares (HOOD) shed 2.7%.
On Wednesday, the company announced an upsized offering of $2.6 billion in convertible debt, with plans to use the proceeds to buy more bitcoin. And earlier this week, the company said it spent $4.6 billion to buy 51,780 bitcoins, to boost its stash to about 331,200 bitcoins.
That's part of MicroStrategy's "strategic goal" announced in October to raise $42 billion worth of capital over the next three years, through equity and debt sales, to buy more bitcoin.
-Tomi Kilgore
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(END) Dow Jones Newswires
November 21, 2024 16:17 ET (21:17 GMT)
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