MicroStrategy's 13% Surge Leaves $180M in Unsettled Trades

MicroStrategy (MSTR) has been facing significant challenges in the stock market, particularly for traders who have taken short positions on the company. In March, MSTR's stock price surged by 13%, creating a difficult situation for short sellers who were unable to cover their positions in a timely manner. This surge in stock price has led to a situation where over $180 million worth of MSTR stock trades failed to settle, a phenomenon known as "Failed to Deliver" (FTD).

FTD occurs when the seller fails to deliver the stock by the T+1 settlement date. This can be due to operational errors or delays in the settlement system. However, it can also indicate that short sellers are struggling to "buy in" their positions. When short sellers sell borrowed shares and the stock price rises instead of falling, they are forced to buy back the stock at a higher price to return it to the broker. This situation often precedes significant volatility in the stock price.

As of April, the short interest in MSTR remains high, with approximately 29 million shares shorted, accounting for over 12% of the float. This high level of short interest, combined with the recent FTD issues, suggests that MSTR's stock price may experience further volatility in the coming months. Short sellers may continue to face difficulties in covering their positions, which could lead to further price movements.