MicroStrategy (MSTR) saw its stock surge as much as 11% on Thursday before giving back some gains after short-seller Citron Research announced that it is betting against the software company known for its massive Bitcoin stash. What is interesting is that Citron, according to its post on X (formerly Twitter), was one of the first to tell readers four years ago that MicroStrategy was the best way to invest in Bitcoin.
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In fact, it had initially set a price target of $700, but when adjusted for its stock split, the stock has actually rallied to over $5,000. However, Citron pointed out that Bitcoin investing has become easier than ever and now believes that the stock’s share price is disconnected from Bitcoin fundamentals. Nevertheless, the firm remains bullish on Bitcoin and is using its MSTR short position as more of a hedge against a potential correction.
Going Against the Crowd
There is no doubt that Citron Research is going against the crowd on this one. Just yesterday, five-star BTIG analyst Andrew Harte praised MicroStrategy’s “21/21,” which includes raising $21 billion from equity and $21 billion from fixed-income securities to buy more Bitcoin. This led him to raise his price target to $570 per share from $290.
In addition, the sentiment among TipRanks investors is currently Very Positive, with an average portfolio weighting of almost 8% among those who have a position in MSTR. Moreover, in the last 30 days, 16.8% of those holding the stock increased their positions. This suggests that investors of the company are very confident about its future.
This optimism for Bitcoin and MSTR is a result of Trump’s election win. Trump has promised pro-crypto measures such as forming a crypto advisory council, firing SEC Chair Gary Gensler, and establishing a national Bitcoin stockpile. These catalysts, along with MicroStrategy’s aggressive Bitcoin strategy, have fueled optimism in the sector despite concerns about sustainability.
Is MSTR a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSTR stock based on eight Buys assigned in the past three months, as indicated by the graphic below. However, after a 664% surge in its share price on a year-to-date basis, the average MSTR price target of $357.38 per share implies 25.8% downside risk.
