MicroStrategy, a Bitcoin development company, has seen a significant drop in its stock price, down almost 40% from its all-time high of $540 a share. This decline comes after a short report from Citron Research was released on Nov. 21, causing the stock to plummet and resulting in losses for retail investors. The drop in MicroStrategy’s stock price also coincided with a 10% decrease in the price of Bitcoin, from its all-time high of nearly $100,000.
Retail investors were heavily involved in buying MicroStrategy stock, with a record daily buy of $42 million on Nov. 20. This marked the largest daily retail buy on record, eight times higher than the daily average in October. In total, retail investors bought nearly $100 million worth of shares in just one week. As a result of the stock price drop, the net asset value (NAV) premium on MicroStrategy has decreased to around 2.09, one of the lowest levels since September. This premium is calculated based on the company’s market cap of $75 billion and its 386,700 bitcoin holdings worth $36 billion.
In terms of trading volume, MicroStrategy saw $136 billion in volume last week, surpassing the trading volume seen during the Gamestop mania. Senior Bloomberg analyst Eric Balchunas noted that even the most intense week of GameStop Mania did not come close to the trading volume MicroStrategy experienced. This surge in trading volume indicates high levels of activity and interest in the company’s stock.
Overall, the recent events surrounding MicroStrategy highlight the volatility and risks associated with investing in high-growth stocks, particularly in the cryptocurrency space. It serves as a reminder for retail investors to carefully consider their investment decisions and be aware of the potential downside risks. The market movements also underscore the interconnectedness of different asset classes, such as stocks and cryptocurrencies, and the impact they can have on each other.
