Stock Track | T-Rex 2X Long MSTR Daily Target ETF Plunges 5.21% in Pre-market on MicroStrategy Risks

Stock Track
2024-12-09

The T-Rex 2X Long MSTR Daily Target ETF (MSTU), a leveraged exchange-traded fund that tracks the stock of MicroStrategy, plunged 5.21% in the pre-market trading session on Monday.

This significant decline is likely linked to concerns surrounding MicroStrategy's unconventional business strategy of heavily investing in Bitcoin and issuing large amounts of equity and debt to fund further Bitcoin purchases. While this approach has attracted a "cult following" among investors, it also carries substantial risks.

MicroStrategy's stock has been trading at a premium of nearly three times the value of its Bitcoin holdings, raising questions about the sustainability of this valuation. Furthermore, the presence of leveraged ETFs like MSTU amplifies the volatility and potential downside risks associated with MicroStrategy's stock movements.

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