MicroStrategy shares have plummeted nearly 40% from their all-time high of $540, leaving retail investors heavily exposed.
Disclaimer: The writer of this report holds shares in MicroStrategy (MSTR).
MicroStrategy (MSTR), a standout stock of 2024, surged an astonishing 416% year-to-date and peaked with gains of 600% last week. However, a sharp reversal was triggered after a short report from Citron Research on November 21.
The selloff aligned with Bitcoin’s decline from its near $100,000 high to $90,000, shedding 10% in just a few days. MicroStrategy, known for its Bitcoin holdings, saw its stock plummet, with retail investors bearing the brunt.
According to data shared by The Kobeissi Letter, November 20 marked a record-breaking $42 million in retail purchases of MicroStrategy stock—eight times October’s daily average. Over the week, retail investors poured nearly $100 million into MSTR shares, only to face heavy losses as prices collapsed.
This plunge has also affected MicroStrategy’s net asset value (NAV) premium. With a market capitalization of $75 billion and Bitcoin reserves valued at $36 billion, the company’s NAV premium has dropped to 2.09, one of its lowest levels since September.
The stock has seen an extraordinary surge in trading volume, with $136 billion traded last week, eclipsing even the heights of the 2021 GameStop frenzy.
“MicroStrategy’s volume last week shattered records, surpassing the most intense trading weeks during the GameStop mania,” noted Eric Balchunas, Senior Bloomberg Analyst. “Even Amazon (AMZN) has never seen such levels.”
For retail investors, the sharp downturn highlights the risks of chasing meteoric gains without regard for potential reversals.
