Short Sellers Target Strategy (MSTR) After Bitcoin Sale
A growing number of short sellers are placing bets against the stock of Strategy (MSTR) after the crypto treasury company sold some of its Bitcoin (BTC) holdings for the first time in four years.
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Strategy is the largest corporate owner of Bitcoin in the world, with holdings of more than 840,00 BTC worth approximately $51 billion at current prices. Strategy’s leader, Executive Chairman Michael Saylor, has long been one of Wall Street’s biggest Bitcoin bulls and a crypto evangelist.
So it unnerved many investors when a regulatory disclosure showed that Strategy recently sold 32 Bitcoin for proceeds of $2.5 million. The sale was made to help Strategy fund dividend payments on its high-yielding preferred stock (NASDAQ: $STRC), which currently yields 11.5%.
The last time that Strategy sold Bitcoin was near the bottom of the 2022 crypto winter, when the company offloaded 704 Bitcoin at $18,000 each.
Short Sellers Circle the Stock
Investor reaction to news of the BTC sale was swift and decisive. MSTR stock has fallen 20% in the past five trading sessions as disappointed investors dumped the shares. Now, short sellers are betting that Strategy’s stock falls further in coming weeks.
Short sellers are options traders who place bets known as “puts” that a stock’s price will decline by a certain amount over a set period of time. More than twice as many put bets than normal have been placed against Strategy’s stock over the past week, according to market data. In all, more than $250 million has been wagered that MSTR stock will continue to decline in coming weeks and months.
Strategy’s Bitcoin sale is also being blamed for causing an accelerated selloff in cryptocurrencies. On June 5, BTC fell below $60,000 for the first time since 2024 as investor sentiment towards crypto sours.
Is MSTR Stock a Buy?
Strategy’s stock has a consensus Strong Buy rating among 14 Wall Street analysts. That rating is based on 12 Buy and two Hold recommendations issued in the last three months. The average MSTR price target of $302.14 implies 150% upside from current levels.
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