MicroStrategy’s stock has tumbled nearly 40% from its peak of just over $540, leaving retail investors exposed to significant losses.

Disclaimer: The author of this analysis holds shares in MicroStrategy (MSTR).

Once the darling of the 2024 stock market, MicroStrategy (MSTR) has seen a meteoric rise of 416% year-to-date, even reaching a staggering 600% gain last week. However, that momentum has reversed sharply.

The selloff began on November 21, after Citron Research released a bearish short report. Since then, MicroStrategy’s stock has nosedived, coinciding with Bitcoin’s 10% drop from its near $100,000 all-time high to $90,000.

Retail investors have been caught in the crossfire. Data shared by The Kobeissi Letter revealed that retail traders purchased a record $42 million in MicroStrategy shares on November 20, an eightfold increase over October’s daily average. Over the week, retail inflows reached nearly $100 million.

This rapid decline has also eroded MicroStrategy’s net asset value (NAV) premium. The company, with a market capitalization of $75 billion and Bitcoin holdings worth $36 billion, now shows an NAV premium of 2.09, the lowest since September.

The frenzy hasn’t just been about price; trading volume has skyrocketed. MicroStrategy recorded $136 billion in volume last week, far surpassing the highest weekly volumes seen during the GameStop (GME) craze of 2021.

“MicroStrategy’s trading volumes last week eclipsed even the wildest days of GameStop mania,” noted Eric Balchunas, Senior Bloomberg Analyst. “Amazon (AMZN) hasn’t experienced anything like this either.”