Bitcoin or MicroStrategy Stock? Analyst Says MSTR Trades at ‘Unjustifiable Premium’ Over BTC

MicroStrategy stock is on a roll, hitting new highs as the price of Bitcoin surges. The “Bitcoin development company” stock (MSTR: NASDAQ) is now priced at $1,746 per share—a year-to-date rise of 615%. 

The price has now gotten “carried away,” however, and is due for a dip in price, investment management firm Kerrisdale Capital said in a new report. Titled “Know When to HODL, Know When to FODL,” the firm said the price of MSTR compared to Bitcoin is no longer justified. 

“We are long Bitcoin and short shares of MicroStrategy, a proxy for Bitcoin, which trades at an unjustifiable premium to the digital asset that drives its value,” the report read. “The days when MicroStrategy shares represented a rare, unique way to gain access to Bitcoin are long over.”

The software firm started aggressively buying Bitcoin back in 2020. It’s now the largest corporate holder of the cryptocurrency, with 214,246 coins—today worth over $15 billion. 

Its co-founder and chairman Michael Saylor has repeatedly said that buying MSTR stock gives investors exposure to Bitcoin in a safe and reliable way compared to owning the digital coins directly or investing in newly approved ETFs (exchange-traded funds).

He argues that MSTR is a good deal because of its lack of management fees. Kerrisdale’s report argued that this pitch isn’t fair.

The U.S. Securities and Exchange Commission approved a number of spot Bitcoin ETFs in January—giving traditional investors the ability to buy shares tracking the price of the cryptocurrency that trade on a regulated stock exchange. 

And the products have been massively successful—with record inflows to the funds—and some have very low fees. 

“Bitcoin is now easily obtainable through brokerages, crypto exchanges, and, more recently, low-fee ETPs and ETFs,” it observed.

It added that buying Bitcoin was a better bet. “Shareholder value creation has been overwhelmingly driven by simple Bitcoin price appreciation—much as it would from owning Bitcoin outright,” it said. 

The price of Bitcoin is up nearly 3% toda, trading for $70,784 per coin, according to CoinGecko. It earlier this month hit a new all-time high of nearly $74,000. 

MSTR is meanwhile down nearly 10% today.

Edited by Ryan Ozawa.