Citron Research says MicroStrategy is 'overheated'

Investing.com -- Citron Research has voiced concerns over MicroStrategy's current valuation, even as the software company's shares have seen exponential growth fueled by its Bitcoin strategy.

In a tweet on Thursday, the research firm reflected on its 2020 endorsement of MicroStrategy as a Bitcoin proxy investment, recalling a price target of $700 when the stock was trading at $200.

Fast forward to today, MicroStrategy's price has soared well over the firm's pre-stock split price target, which Citron said is a testament to founder Michael Saylor's bold Bitcoin-centric approach.

"Nearly 4 years ago to the date, Citron was the first to tell readers that MicroStrategy was the ultimate way to invest in Bitcoin, setting a $700 target," Citron tweeted, acknowledging Saylor's foresight in adopting the cryptocurrency.

However, Citron now considers MicroStrategy's valuation "overheated" and has hedged with a short position in the stock.

Despite maintaining a bullish stance on Bitcoin itself, the firm highlighted that MicroStrategy's trading volume has become increasingly detached from the fundamentals of the cryptocurrency.

"With Bitcoin investing easier than ever (ETFs, $COIN, $HOOD), $MSTR's volume has completely detached from BTC fundamentals," Citron wrote, signaling what they see as an overvaluation of the stock.

While lauding Saylor's leadership, Citron emphasized its cautious outlook on the stock, noting, "Much respect to @saylor, but even he must know $MSTR is overheated."