MicroStrategy, a software company that has pivoted to become a major corporate holder of Bitcoin, saw its stock plummet by over 5% on Thursday, as analysts warned that the company's valuation has become significantly overheated compared to the value of its underlying Bitcoin holdings.
According to a report from Barron's, MicroStrategy's stock valuation has surged to nearly three times the value of its Bitcoin stake, which is currently estimated to be around $17 billion. The company's market capitalization has soared to $47 billion, up nearly fourfold this year, while Bitcoin itself has risen by a more modest 65%.
Analysts cite several potential factors contributing to the premium valuation, including short-seller covering, speculation around the potential impact of a Trump victory on Bitcoin prices, and optimism around MicroStrategy's strategy of issuing debt to fund further Bitcoin acquisitions. However, many argue that the significant premium over the value of its Bitcoin holdings may be unjustified and could make the stock vulnerable to a pullback.
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