MicroStrategy Short Sellers Face $3.3 Billion Losses Amid Stock Surge

According to Bloomberg, short sellers betting on MicroStrategy's decline have accumulated paper losses of approximately $3.3 billion so far in 2024, as the stock has gained over 170%. Data from S3 Partners LLC reveals that mark-to-market losses over the past 12 months have exceeded $4.3 billion. Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, stated that shorting MicroStrategy is a challenging position to take. He noted that the stock's recent volatility could have been beneficial for short sellers, as shares fell more than 20% in one day at the beginning of March. The contrarian group may face further difficulties if the enterprise software maker's shares continue to rise, as traders risk a short squeeze. This phenomenon occurs when sellers may be forced to buy the stock back to cover their losing positions, driving the share price even higher and putting more pressure on the cohort. The amount of MicroStrategy shares available to trade, or float, is relatively high at over 22%, which is generally a bearish signal. This is in line with most cryptocurrency-linked stocks. This week alone, the company purchased nearly $1 billion worth of Bitcoin. Cowen analysts, led by J. Derrick Wood, stated that this move is not a short-term trading strategy but rather reflects management's belief that Bitcoin will ultimately prove a superior store of value. Wood added that MicroStrategy shares remain an attractive vehicle for investors looking to gain Bitcoin exposure.