Why are short sellers focusing on MicroStrategy shares, and for what reason?

Kerrisdale Capital, an investment firm, is shorting MicroStrategy shares because it believes it is trading at a "unjustifiable premium" compared to Bitcoin.

The chief investment officer of Kerrisdale Capital, Sahm Adrangi, spoke with Cointelegraph to provide more context for the firm's assessment that MicroStrategy stock is overvalued.

The MicroStrategy business concept was condensed into six words by Adrangi.

He declared, "They own X amount of Bitcoin."

This alone, according to Adrangi and his colleagues in Kerrisdale, did not make MicroStrategy's cost acceptable. MicroStrategy stock implies a Bitcoin price that is 2.5 times higher than the actual value, per its March report.

According to Adrangi, the software industry isn't worth much—it's worth a billion, maybe a billion [point] five, or someplace in between. Michael Saylor is the owner of all of this Bitcoin. He creates $1 billion in debt and purchases $1 billion in Bitcoin if he wants to purchase more of it. It doesn't raise the company's enterprise value.

Leading MicroStrategy's initial Bitcoin purchases in 2020 was Michael Saylor, the company's executive chairman and co-founder.

Saylor is one of the most ardent supporters of Bitcoin, and MicroStrategy now holds substantial amounts of the cryptocurrency because to his approach. MicroStrategy purchased 11,931 more Bitcoin on June 20th for $786 million, increasing its total holdings to 226,331 Bitcoin.

MicroStrategy has invested $8.3 billion in Bitcoin overall. Its Bitcoin holdings are worth $14.6 billion.

Adrangi is not impressed, despite the fact that it could appear to a layman like a healthy unrealized profit.

In terms of MicroStrategy's track record, not much indicates that it excels at buying low and selling high. In the end, Saylor simply purchases Bitcoin at various intervals. Also, you can purchase Bitcoin at various periods, according to Adrangi.

Currently, MicroStrategy owns 1% of all Bitcoin.