There may be little reason left for investors to trade MicroStrategy stocks to gain exposure to Bitcoin (BTC) after the approval of several spot Bitcoin exchange-traded funds (ETF) this year, argues investment firm Kerrisdale Capital.

MicroStrategy’s executive chairman Michael Saylor, would likely beg to differ. 

“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, adding it believes MSTR price is overvalued.

The firm noted it had short positions on the MicroStrategy stock.

“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.”

MSTR is currently trading at $1,704. Over the last month, it saw a growth of 66.65%, and over the past six months, it has experienced an increase of approximately 419%.

On the other hand, Bitcoin’s price currently stands at $70,849. It has had a one month increase of 15.8%, and soared 163.31% over the past six months.

“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,” it stated.

It also pointed out MicroStrategy's increasing debt-to-asset ratio and limited cash flow, which amounted to just $10 million in 2023 from its “sleepy” software analytics business. This made up only 3% of the company's overall enterprise value.

MicroStrategy’s Saylor confident in firm's offering

However, Saylor has said on several occasions that he remains confident his company would continue to be an attractive offer for investors. 

In December, Saylor told Bloomberg TV that his company would still offer a high-performance vehicle for people who are Bitcoin-long investors. 

“The ETFs are unlevered and they charge a fee,” Saylor told Bloomberg. “We provide you leverage, but we don’t charge a fee.”

Saylor also recently announced that MicroStrategy is undergoing a rebrand as a “Bitcoin development company.”

In a Feb. 12 interview with CNBC, Saylor explained that “it is a natural decision for us given the success of our Bitcoin strategy, and our unique status as the world’s largest public company holder.”

MicroStrategy holds 214,246 Bitcoin, as per data from Bitcoin Treasuries. This is approximately a 54% increase from its holdings of 138,955 Bitcoin this time last year.

Saylor added that MicroStrategy, as an operating company, has more flexibility in managing its capital and operations than an investment trust.

“We’re going to develop software, we’re going to generate cash flow, we’re going to leverage the capital markets, all in order to accumulate more Bitcoin for our shareholders, and also to promote the growth of the Bitcoin network," he stated.

On March 19, Cointelegraph reported that MicroStrategy sold another $604 million in convertible notes to buy an additional 9,245 BTC.

Related: Bitcoin is more of a ‘billion-dollar building in cyberspace,’ argues Saylor

Kerrisdale Capital says it remains bullish on Bitcoin, claiming it provides much better direct value for investors. The firm indicated that MSTR's current price implies Bitcoin’s price is $177,000, approximately two and a half times the price of Bitcoin.

The firm also revealed it has long positions in two newly approved spot Bitcoin ETFs, the iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC).

It claimed that shareholders would find equivalent value in owning Bitcoin directly rather than holding MSTR stock at this stage.

“Shareholder value creation has been overwhelmingly driven by simple bitcoin price appreciation – much as it would from owning bitcoin outright."

Despite MicroStrategy seeing significant growth in its stock over the past 12 months, it declined approximately 11.18% on the day.

Cointelegraph reached out to MicroStrategy for comment but did not receive a response at the time of publication.

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