Betting Against Bitcoin and Michael Saylor: Could MicroStrategy See a Short Squeeze?
A new report shows strong short interest in software companies MicroStrategy Inc MSTRwhich is operated by Michael Saylor and is among the largest holders of Bitcoin BTC/USD. Here’s the latest data and how Saylor may have egged on short sellers.
What happened: Short interest in MicroStrategy hit a record 51% recently, according to data from S3 Partners. This represents $1.35 billion, according to data from S3 Partners, shared by Bloomberg.
In the last month, the short interest has increased by over 1.2 million shares in the company. Short interest is up by 680,000 shares in the last week, according to the report.
“S3 Sentiment and Market Positioning Data Reveal $MSTR is a Favorite Short Among the Multi-Strat Hedge Fund Cohort,” S3 Partners tweeted in a post sharing the Bloomberg article.
The move by short sellers comes as MicroStrategy shares have fallen, and the company remains heavily exposed to Bitcoin.
Shares of MicroStrategy are up over 70% since the end of June, a move that corresponds with Bitcoin trading higher over the past month.
“It certainly looks like shorts are selling into the last strength,” S3 Director Matthew Unterman said about increased card interest in the last seven days.
MicroStrategy has moved up the Fintel short squeeze leaderboard in recent weeks, currently ranked ninth, with the data provider showing 39.3% of the float and a borrowing cost of 11.2%.
Related Link: 5 Short Squeeze Stocks That Could Rise
What’s next: High short interest in MicroStrategy comes as the company is set to report second-quarter financial results after the market closes on Tuesday.
The company reported first-quarter revenue of $119.3 million on May 3, missing a Street estimate of $127.2 million, according to data from Benzinga Pro.
The second quarter report comes as Bitcoin is trading at $23,289.82 and ended the second quarter at $19,784.73. While there will likely be some commentary on the higher Bitcoin price since the end of the quarter, it is important to remember that Bitcoin was also trading significantly higher in the first quarter and when MicroStrategy last reported quarterly results.
Bitcoin ended the first quarter at $45,538.68 and was trading in the $37,000 to $38,000 range when MicroStrategy shared its first quarter results.
MicroStrategy owns around 130,000 Bitcoin, paying an average price of $30,000.
“We have a simple strategy and our strategy is we just buy Bitcoin and we have Bitcoin,” Saylor told Benzinga recently.
Free cash flow from the company is converted to Bitcoin and the approach is expected to continue by MicroStrategy and Saylor, which has led to increasing bets against the company and its CEO with a belief that the price of Bitcoin will fall again.
The high short interest may have been predicted or provoked by Saylor.
“If you hate Bitcoin, you can short our stock … If you love Bitcoin, you can buy our stock,” Saylor told Benzinga.
There are several ways to bet against the price of Bitcoin and also ways to bet that the price will rise. As a large holder of Bitcoin and a publicly traded stock with options, MicroStrategy may be one of the easiest ways to bet for and against Bitcoin, Saylor said publicly.
MSTR Price Action: MicroStrategy shares are up 3% Tuesday at $283.70. Shares are down 49.3% year to date in 2022 and down 55.6% in the past year with a 52-week trading range of $134.34 to $891.38.
Photo: Created with an image from michael.com
