MicroStrategy Slumps 14% After Short Seller Says Stock Trades at an Unjustifiable Premium to

MicroStrategy’s (MSTR) shares fell as much as 14% on Thursday after a prominent short seller, Kerrisdale Capital, said in a report that it is short-selling the stock while betting long on bitcoin (BTC).

“Shares of MicroStrategy have soared amid a recent rise in the price of bitcoin, but as is often the case with crypto, things have gotten carried away,” the short seller wrote.

None of the reasons cited for the stock’s relative attractiveness “justify paying well over double for the same coin,” the report said.

Software developer MicroStrategy’s business model is based on the acquisition and holding of bitcoin, and its crypto stash represents the majority of the company’s valuation. The company now holds about 214,246 bitcoins, which is more than 1% of all the 21 million tokens that will ever exist.

MicroStrategy’s market cap is about $28 billion. Its bitcoin holdings are worth about $15.2 billion.

The report notes that the bitcoin price currently implied by MicroStrategy’s share price is $177,000, which is two and a half times the spot price of the cryptocurrency.

“The days when MicroStrategy shares represented a rare, unique way to gain access to bitcoin are long over,” the note said, adding that “bitcoin is now easily obtainable through brokerages, crypto exchanges and more recently low fee exchange-traded products (ETPs) and exchange-traded funds (ETFs).”

MicroStrategy didn’t respond to a request for comment before publication.

Kerrisdale isn’t the only investor selling shares of MicroStrategy short. Total short interest in crypto stocks is $10.7 billion, with MicroStrategy and Coinbase (COIN) making up 84% of the bearish bets, according to a report from S3 Partners.

UPDATE (March 28, 15:21 UTC): Updates headline and story throughout to include share price move, company valuation.