Analysis: $180 Million Worth of MSTR Failed to Deliver in March, Potential for Significant Stock Price Volatility

On April 23, it was reported that traders shorting MicroStrategy (MSTR) might be facing a stock shortage dilemma. MSTR's stock price rose by 13% in March, making it difficult for short sellers to cover their positions and return the shares to brokers on time.

According to data from the U.S. Securities and Exchange Commission (SEC) and Fintel, over $180 million worth of MSTR stock transactions failed to deliver last month. This "failure to deliver" (FTD) typically occurs when the seller fails to deliver the stock by the T+1 settlement date. Failures to deliver may result from operational errors or settlement system delays, but they can also suggest that short sellers are experiencing "covering difficulty"—a situation where shorts need to repurchase the stock at a higher price if the stock price rises instead of falls. This scenario often indicates impending significant stock price volatility.

Currently, the stock's short interest remains high. Fintel data shows that as of April, short positions were approximately 29 million shares, accounting for over 12% of the floating shares.