MicroStrategy stock faces new short bet after stunning bitcoin rally nears $100,000

MicroStrategy ( MSTR ) shares were on another wild ride early Thursday, rising as much as 11% before giving up some of those gains after short-seller Citron Research said it had taken a new bet against the stock, which has risen over 600% this year.

MicroStrategy shares are up more than 80% since the victory of crypto-friendly President Donald Trump earlier in November. Bitcoin itself is up about 30% over the same period, hitting a new record high of $98,000 early Thursday before paring gains after the market opened.

The software-company-turned-bitcoin-play revealed earlier this week it bought an additional 51,780 bitcoins for approximately $4.6 billion in cash at an average price of just over $88,500 per bitcoin. The company has acquired a total of 331,200 bitcoins for $16.5 billion, spending an average of 49,874 per bitcoin.

However, this stock rally has caught the attention of investors, who see this violent move in 2024 as potentially unsustainable.

In one post on X early Thursday, Citron Research said that while the firm remains bullish on bitcoin — and was bullish on MicroStrategy’s bitcoin play years ago — the movement in MicroStrategy stock has “completely decoupled from BTC fundamentals.”

“Bitcoin is dramatically beating the ‘Magnificent Seven,'” MicroStrategy chairman Michael Saylor said in the company’s latest earnings call in October, adding, “Your best hope for actually keeping up with the Magnificent Seven is constructive bitcoin strategy.”

Read more: Bitcoin clears another record: Is it a good time to invest?

The company has in recent years adopted bitcoin as its primary treasury reserve asset through investments funded by equity, debt financing and own cash flows under the leadership of Michael Saylor, who served as CEO until 2022 before assuming the role of chairman.

Micro strategy started investing in bitcoin in 2020 with what now seems like a paltry investment of $250 million.

“We are proud to be at the forefront of institutional bitcoin adoption,” CFO Andrew Kang said in the company’s Oct. 30 earnings call.

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Saylor added: “If you’ve followed our journey, you know our thesis was that bitcoin is like the Facebook of money (META) or the Google of money (GOOG). It’s the dominant digital monetary network.”

As Yahoo Finance’s Josh Schafer reported earlier in November, crypto-related stocks besides MicroStrategy and bitcoin, such as Coinbase (COIN) and Robinhood (HOOD), have been on an upward trajectory since Trump’s victory as part of the so-called Trump deal.

The president-elect has made promises to the industry, including the appointment of a crypto-presidential advisory council, the firing of SEC chairman Gary Gensler, and the creation of a “strategic national bitcoin repository.” In July, Trump also attended a bitcoin conference in Nashville as a signal of his friendliness to the sector.

Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5.

Josh Schafer contributed reporting.

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