Investment banking company, Citi has downgraded the shares of MicroStrategy from ‘neutral’ to ‘sell’ stating the company’s recent massive adoption and investments in bitcoin as overextended.
According to Senior Equity Research Analyst at Citi, Tyler Radke the focus of CEO Michael Saylor on bitcoin is disproportionate, stating that recent insider selling is “significant and broad-based.”
MicroStrategy has, in the past few months, invested heavily in bitcoin. In August, it splashed $250 million into bitcoin and added another $175 million in September. MicroStrategy also bought 2,754 BTC, worth $50 Million on December 4, and announced its intention to invest another $400 million into bitcoin yesterday.
All these investments have seen the company accumulating a total of 40,824 BTC (worth over $778 million).
Bitcoin is still at the $18k mark, falling down by 3.27%. its current price is $18,224.28 within the last 24 hours. The trading volume of bitcoin in the last 24 hours is $28.51B. The current market capitalization of bitcoin is $338.19B. Within the last 24 hours, bitcoin has experienced $17,640.56 low and $18,979.01 high. Currently, 18,566,350 bitcoins are in circulation.
Stats and Image by Coin Desk
Radke also sees the recent move of MicroStrategy to raise funds to purchase bitcoin worth $400 million by selling convertible senior notes as risky.
Since August, the shares of MicroStrategy have gone up mainly as a result of Michael Saylor’s praise-singing of bitcoin, however, the shares went down by 10% yesterday.
“MSTR’s bitcoin investment has returned $250M (or worth $26/share or +20% towards stock) since August ’20. While impressive, it pales in comparison to the 172% return in the stock. At the current stock price, our analysis suggests that the market is pricing in much more optimistic valuation scenarios for the core business and Bitcoin,” Radke added.