Andrew Left, a notorious short-seller, tweeted negatively about MicroStrategy (NASDAQ:MSTR) 13 minutes into Thursday’s trading session. Within 90 minutes, the stock had declined 16% and it closed the day without recovering.
Although Left congratulated CEO Michael Saylor for his “visionary bitcoin strategy,” Left concluded, “MSTR’s volume has completely detached from BTC fundamentals.”
The Citron Research founder then disclosed that he had sold short.
MicroStrategy has been a public company since June 1998 and hit an all-time high of $548.20 around the time of Left’s tweet on Thursday. It closed considerably lower, however, at $397.28 per share.
Left is a defendant in multiple lawsuits. His Citron co-founder, Ryan Choi, consented to a $1.8 million judgment to settle Securities and Exchange Commission (SEC) allegations of securities fraud. Left is still fighting that lawsuit in addition to a criminal indictment for 17 counts of securities fraud and one count of lying to federal investigators.
Left denies the allegations and US criminal defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Short-selling just one of many factors
Whether or not short-sellers are to blame for Thursday’s decline is difficult to determine. Investors buy and sell for many reasons. Moreover, owners of convertible debt often sell shares short in order to hedge their convertible position, not because they are betting on a decline in the share price.
MicroStrategy is also very active in the market for its own stock, issuing dilutive instruments that have had immediate impacts on its inflating supply schedule this month.
Read more: Will MicroStrategy exceed bitcoin’s market cap in 2025?
Even after yesterday’s decline, the company still trades at an enviable valuation. The software company-turned-bitcoin holding company trades mainly on a multiple atop its 331,200 bitcoins. As of pre-market trading on Friday, its market cap equaled 2.8X its bitcoin treasury.
This underlying asset is also performing exceptionally. Now nearing the psychologically important $100,000 level, bitcoin has rallied over 150% year-to-date.
Overnight, someone screenshotted a list of MicroStrategy’s bond buyers from the Bloomberg Terminal. Inspiring confidence in the quality of its counterparties, the list of names included Allianz, State Street, Blackrock, Franklin Templeton, and Royal Bank of Canada.
Despite this being only a selection from a single series among a half dozen other bonds, the list’s credibility attracted social media attention.
Since October 30, the company has been fulfilling its promise to buy tens of billions of dollars worth of additional bitcoin. It’s simultaneously selling new shares of common stock as well as issuing a variety of corporate debt.
Saylor promises to direct substantially all proceeds from these sales into the company’s bitcoin treasury.
