Big shorters are betting $6.9B against MicroStrategy stocks

Michael Saylor’s software intelligence firm MicroStrategy has a net short position hedged against it.
Michael Saylor’s software intelligence firm MicroStrategy has a net short position hedged against it.

Several institutions are still holding out for a decline in the stock price of Michael Saylor’s software intelligence firm MicroStrategy, with $6.9 billion in major short positions. 

However, the short-seller almost tripled in six months.

As of June 6, MicroStrategy has 18 short positions listed on investment research firm Fintel’s “The Big Shorts” list — which is a list of the largest short positions disclosed by institutions to the United States Securities and Exchange Commission.

The biggest position, approximately $2.4 billion, is also the 27th-largest net short position among institutions.

It is just over a billion less than Amazon’s highest net short position of $3.59 billion. The biggest net short position in the U.S. is on the SPDR S&P 500 Trust exchange-traded fund (ETF), which is $114.06 billion.

In October 2022, MicroStrategy’s stock price “days to cover” went as high as 5.80 days. Source: MarketBeat

Despite some institutions betting on a MicroStrategy fall, there’s been a marked decrease in short-seller confidence. The short-interest ratio for MicroStrategy’s stock has decreased by nearly 50% over the last six months, from 3.1 days to 1.5 days. 

The popular indicator helps traders analyze the risk of a short squeeze by indicating the average number of days short sellers need to close their positions. The lower the number of days, the less short-seller interest.

According to Google Finance data, MicroStrategy stock has rallied since December 2023, when it started at $570 and has since tripled to $1,656.

MicroStrategy’s stock price is up 30.57% over the past 30 days. Source: Google Finance

It comes only months after crypto-skeptic investment firm Kerrisdale Capital put pressure on MicroStrategy shares following the launch of spot Bitcoin (BTC) exchange-traded funds (ETF) in 2024.

Related: MicroStrategy and Michael Saylor settle tax case for $40M

Kerrisdale Capital argued that there may be little reason left for investors to trade MicroStrategy stocks to gain exposure to Bitcoin after the approval of several spot Bitcoin ETFs this year.

“The days when MicroStrategy shares represented a rare, unique way to gain access to Bitcoin are long over,” Kerrisdale Capital explained in a March 28 analyst note.

More recently, Cointelegraph reported that MicroStrategy has significantly outperformed Bitcoin over the past twelve months. The stock is up approximately 469% over the past year, with Bitcoin up 168%.

Magazine: Become a Bali crypto digital nomad like me: Here’s how

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.