In keeping with Saylor’s characterization of the short-sale by one among historical past’s most profitable short-sellers, there are in all probability 3 ways Chanos’ commerce may go — all of which is able to allegedly lose cash.
The hedge fund founder who made a reputation for himself predicting the collapse of Enron and Chinese language actual property thinks MSTR is overvalued. Particularly, Chanos has positioned a hedged short-sale towards Saylor’s firm.
As a result of MSTR trades at a 1.7X a number of to its $63 billion internet asset worth (mNAV), Chanos has shorted MSTR and concurrently hedged his brief with a protracted bitcoin (BTC) commerce.
That hedged guess is straightforward. Chanos believes MSTR’s mNAV will decline over time. As a result of anybody can comply with alongside, the commerce has arrange a showdown between two Wall Avenue titans.
Saylor thinks that Chanos misunderstands what MicroStrategy affords. Deflecting consideration away from MSTR’s premium relative to its BTC holdings, Saylor instructed Bloomberg TV’s viewers that he’s really the world’s “largest issuer of BTC-backed credit instruments.”
3 ways for Jim Chanos to lose cash shorting MicroStrategy
Saylor went on to elucidate three paths that Chanos’ brief commerce towards MicroStrategy may take. All three paths will, in Saylor’s self-serving view, lose cash for his short-selling adversary.
Saylor targeted on MicroStrategy’s three publicly traded collection of most well-liked shares — Strike (STRK), Strife (STRF), and Stride (STRD). He defined that through these dividend-yielding choices, MicroStrategy has discovered one other method to purchase BTC that isn’t dilutive to widespread MSTR shareholders.
That is after all, full monetary gibberish. Mr. Saylor needs you to worth his enterprise based mostly not solely on the web worth of his Bitcoin holdings (NAV) at market, however moreover with a a number of on the change in that NAV! As a result of now he can leverage his stability sheet, lol. https://t.co/DOiEe4aJXn
— James Chanos (@RealJimChanos) June 10, 2025
Though Saylor used to emphasise at-the-market (ATM) share gross sales that actually diluted MSTR shareholders $1 for each $1 in BTC buy, preferreds don’t improve the share depend of MSTR.
As an alternative, they encumber the long run money movement of MicroStrategy — a few of which should be paid out as dividends to most well-liked shareholders.
In Saylor’s view, there’s loads of urge for food on Wall Avenue for a brand new collection of most well-liked shares or different non-dilutive credit score devices. In consequence, he sees three ways in which Chanos’ brief sale may transpire.
First, Saylor thinks that MicroStrategy’s mNAV may persist or improve for a few years to return because of sustained market demand for BTC treasury firms. That is Chanos’ worst-case situation.
Second, Saylor thinks that MSTR may commerce down barely to a “weak premium,” wherein case “we’re just going to sell the preferreds” to lift cash and purchase extra BTC.
Third, Saylor warned Chanos that if MSTR ever declined to a unfavourable mNAV, he plans to promote extra preferreds and use the proceeds to purchase again MSTR inventory.
‘No liquidation risk’ and ‘never come due’
Devices like STRK, STRF, and STRD preferreds have “no liquidation risk,” “never come due” in principal compensation, and “there’s not even an interest rate risk.”
Not like company bonds or dilutive widespread inventory choices, preferreds and different devices may hold non-dilutive capital flowing into MicroStrategy for a really very long time, Saylor believes.
Chanos, for his half, fully disagrees with Saylor that this capital-raising enterprise will be capable of persist its mNAV over the long run.
Chanos defined his outlook succinctly, saying, “Shareholders are paying around $220,000 for BTC that trades around $110,000.” That could be a simple, apparent play for a hedged short-seller.
