Big shorters have placed significant bets on Michael Saylor’s business intelligence and software firm, MicroStrategy, selling stocks worth approximately $6.9 billion. Despite the substantial short positions, MicroStrategy stocks (MSTR), have continued to rise, outperforming investor expectations. 

MicroStrategy Big Shorters Lose Confidence

MicroStrategy short sellers are currently losing confidence as the price of MSTR stocks has skyrocketed over the past six months. The software intelligence firm currently holds a staggering $6.9 billion in short positions, constituting 23.14% of its market capitalization of nearly $30 billion. 

Short selling is a trading strategy where investors speculate on a stock’s potential decline. These investors, typically called shorters, borrow shares and sell them in the hopes that they will fall and then buy them back again at a lower price to take profits. 

In the context of MicroStrategy, the company’s stocks have not witnessed a significant decline since the beginning of the year. To be precise, MSTR stocks have risen by approximately 190.08% over the past six months. 

Numerous institutions are still hoping for a decline in MSTR’s price to enable them to generate profits. The high stakes and substantial capital involved in shorting MicroStrategy could pose a risk to several investors if the price of the stock does not plummet. 

Moreover, the tripling of MSTR stock value from $570 in December to $1,656 has made current short positions incredibly expensive. If the company continues to record more gains in its stock prices, short sellers may be put in a precarious position, potentially forcing many to exit their trades early to avoid bigger losses. 

Fintel, a financial data and intelligence provider has revealed a big short list, outlining the largest short positions disclosed by institutions to the United States Securities and Exchange Commission (SEC). According to the data, MicroStrategy’s biggest net short position holds approximately $2.4 billion. 

MSTR’s big short position is also the 27th largest amongst other institutions. SPDR S&P 500 ETF Trust currently ranks first, holding more than $114 billion in net shorts. 

MicroStrategy Stock Price Update

Short sellers have not been the only investors making big bets, as MicroStrategy founder and former Chief Executive Officer (CEO), Michael Saylor has been making substantial wagers on Bitcoin for the past few years. 

Earlier in January 2024, Saylor revealed he was selling shares to buy more Bitcoin. This decision comes after numerous Bitcoin acquisitions, positioning MicroStrategy as the top Bitcoin holder amongst public companies, according to CoinGecko. As of May 1, 2024, the software firm owned a staggering 214,400 BTC, valued at $15.2 billion, and accounting for more than 1% of Bitcoin’s total circulating supply. 

Moreover, in one year, MSTR stocks have risen by more than 469.66%, fueling a price increase to $1,656.63, as of writing. Google Finance data has disclosed that the stock value is still appreciating. In the last five days, MSTR is up by 3.67% and 31.75% over the past month. 

Featured image created with Dall.E, chart from Tradingview.com