Kobeissi Letter said in a post on X that the market is concerned about MicroStrategy's proposed 10 billion authorized share increase. Through a combination of convertible notes and debt issuance, MSTR has made extensive use of its own leverage. The company must issue more debt or equity to continue its Bitcoin buying spree. It added: "If approved, MicroStrategy's total shares could increase from 330 million to 10.33 billion. The problem is that it currently puts the company in a 'lose-lose' situation." Felix Hartmann, founder of Hartmann Capital, said MicroStrategy's stock price "will eventually collapse, but most short sellers will choose the wrong time, resulting in the failure of shorting BTC and MSTR bets." Hartmann said: "In 5 years, MSTR will first become a top 5 company by market capitalization, and then eventually go bankrupt. We are too early." But he added that the opposite could also be true: "The counter-argument is that in a bull market, the company will be able to use more leverage, and when sitting on $300 billion worth of BTC, repaying the $1-4 billion due in 2027-9 will be a piece of cake."
Unchained market research director Joe Burnett called MicroStrategy's current strategy "hyperbitcoinization."
Burnett said the company trades at a premium, so it can increase the price of each Bitcoin share through leverage. "Premium trading allows them to sell shares at a price above net asset value, buy more Bitcoin, and reduce leverage-further increase the price of each Bitcoin share. Repeatedly."
MSTR shares have fallen 20.18% in the past 30 days, but are still up 342.15% since January 1. (Cointelegraph)