📈 Citron Shorts MicroStrategy

Alphabet shares slide, DirecTV spikes Dish deal, Gap surges on solid holiday start, Advance borrows against Reddit stake, MicroStrategy takes hit but Bitcoin stays course

Author

Evelio Silvera
November 22, 2024

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Good morning.

⚡ The Fast Five → Alphabet shares slide, DirecTV spikes Dish deal, Gap surges on solid holiday start, Advance borrows against Reddit stake, MicroStrategy takes hit but Bitcoin stays course

🔎 Market Trends → Wall Street closes higher; Amazon, Alphabet drop; US Futures Hold Steady as Wall Street Eyes Weekly Gains

And now…

⏱️ Your 5-minute briefing for Friday, November 22, 2024:

MARKET BRIEF
Before the Open

As of market close 11/21/2024.

Pre-Market

  • Deere shares jumped 8.1%, among the best performers on the S&P 500.

  • Alphabet's class A and C shares fell more than 4.5% each, the steepest decline on the S&P 500 and among the worst on the Nasdaq.

Fear & Greed

 

Markets in Review

Nvidia Powers Ahead, Markets Mostly Gain

The Dow climbed 1.1% to 43,870.4, with the S&P 500 up 0.5% at 5,948.7. The Nasdaq was flat at 18,972.4, as utilities led sector gains while communication services and consumer discretionary lagged.

The Big Picture:

Wall Street cheered Nvidia’s (NVDA) blockbuster earnings, with its AI-fueled growth overshadowing mixed macroeconomic signals. Housing rebounded, Fed signals stayed ambiguous, and oil spiked on geopolitical tensions.

Nvidia's fiscal Q3 results showed profits more than doubling year-over-year, and its optimistic guidance outpaced Wall Street’s projections. Meanwhile, Deere (DE) surprised investors with strong earnings, while Alphabet (GOOG) and Pinduoduo (PDD) struggled under regulatory and competitive pressures.

Oil rallied on news of a Russian missile strike in Ukraine, adding 2% to settle at $70.10 per barrel. Gold inched up 0.8% to $2,672.40 per ounce, signaling investor caution amid global uncertainties.

Market Movers:

  • Deere (DE) soared 8.1% after beating earnings estimates despite industry headwinds. Its resilience shows strong demand for agricultural and construction equipment. Deere’s fiscal 2025 outlook suggests challenges, but investors remain optimistic about operational efficiencies.

  • Alphabet (GOOG) dropped 4.5% after the DOJ proposed divesting its Chrome browser. Regulatory risk looms large for tech giants, but Alphabet's vast ecosystem offers insulation from worst-case scenarios.

  • Pinduoduo (PDD) slid 10.6%, as rising competition in Chinese e-commerce weighs on profitability. Aggressive investment in growth could pay off long-term, but near-term margin pressure is unavoidable.

What They’re Saying:

“The worst of the downturn in home sales could be over,” said Lawrence Yun, Chief Economist at NAR, after October sales posted their first annual gain in three years.

WHAT WE’RE WATCHING
Events

  • Thurs. Nov 27: Dept. of Labor - Unemployment Claims - 8:30am

  • Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.

Earnings Reports

  • Today: Buckle, Soho House, Destination XL Group

  • Monday: Agilent, Zoom, Bath & Body Works, Fluence Energy

MARKET BRIEF
Leading News

MicroStrategy Takes a Hit, But Bitcoin Bulls Stay the Course

Why it matters:

A 16% drop in MicroStrategy (MSTR) shares may spook investors, but its outsized bitcoin bet underscores the growing entanglement between crypto and Wall Street. Understanding these dynamics is crucial as Bitcoin (BTC-USD) reaches new all-time highs

Zoom Out:

MicroStrategy’s meteoric rise—up over 500% year-to-date—hit turbulence after Citron Research announced a short position, citing a disconnect from bitcoin fundamentals. Despite this, the company remains one of the most significant institutional players in the bitcoin ecosystem.

  • The company recently added 51,780 bitcoins to its holdings, bringing its total stash to a jaw-dropping 331,200 BTC. These acquisitions, averaging $49,874 per bitcoin, have become its primary treasury strategy.

  • Bitcoin, meanwhile, soared to $98,000, a 30% jump since President-elect Donald Trump’s victory. His pro-crypto stance, including promises of a national bitcoin reserve, has buoyed market sentiment.

Citron’s skepticism highlights a key tension: can MicroStrategy sustain its valuation when much of its value rides on bitcoin’s swings? The bearish call questions whether the stock’s rally has outpaced even BTC’s remarkable ascent.

Deep Dive:

  • BTC Strategy: MicroStrategy’s pivot to bitcoin in 2020 began with a $250 million investment. Today, its bitcoin holdings exceed $16.5 billion.

  • Trump Bump: Crypto-related stocks, including Coinbase (COIN) and Robinhood (HOOD), are riding the wave of Trump’s crypto-friendly platform, signaling potential policy shifts that could further legitimize the sector.

  • Citron's Call: The short seller maintains a bullish outlook on bitcoin but sees MicroStrategy as “detached from BTC fundamentals.”

Market Pulse:

"Your best hope to actually keep up with the Magnificent Seven is constructive bitcoin strategy," said MicroStrategy Chair Michael Saylor, doubling down on the company's commitment to BTC.

Bull’s Take:

MicroStrategy’s bold bitcoin bet aligns with a larger trend: crypto adoption as a mainstream asset class. While Citron’s concerns warrant caution, bitcoin’s growth and Trump’s pro-crypto policies could keep the tailwinds strong. For investors, MSTR offers leveraged exposure to bitcoin’s upside—but proceed with eyes wide open. Diversifying with direct BTC holdings or ETFs like ProShares Bitcoin Strategy ETF (BITO) may provide a steadier ride.

Headlines

  • Alphabet shares slide 4% following DOJ push for Google to divest Chrome (link)

  • DirecTV spikes Dish deal over debt swap exchange (link)

  • Hyundai recalls over 145,000 electrified US vehicles on loss of drive power (link)

  • Gap says it picked up wealthier shoppers, and more market share, despite weak clothing demand (link)

  • Advance Plans to Borrow Against $1.2 Billion Reddit Stake (link)

  • Spirit Airlines is officially a penny stock (link)

CRYPTO
Fear & Greed

 

Headlines

  • Bitcoin hits fresh record, marches toward $100,000 as rally continues (link)

  • Crypto tokens targeted by US SEC jump on Gensler’s planned exit (link)

  • Cardano's ADA Leaps to 2.5-Year High of 90 Cents as Whale Holdings Exceed $12B (link)

DAILY SHARE
On the Socials

*Hat-tip to netcapgirl

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