- MicroStrategy proposes a $2B stock offering to grow its Bitcoin holdings.
- The company holds 446,400 Bitcoin valued at $43.9B, with a 57% profit.
MicroStrategy Incorporated (MSTR) intends to acquire up to $2 billion through the issuance of perpetual preferred stocks. This action aims to bolster its financial reserves, contributing to the execution of its 21/21 Plan. This plan aspires to amass $21 billion in equity and debt securities over a three-year period. The company will offer these securities in compliance with U.S. regulations and has scheduled this offering for the initial quarter of 2025, provided market conditions are favorable and the company deems it appropriate. This move is subject to approval by the Securities and Exchange Commission (SEC).
MicroStrategy’s perpetual preferred stock offering comes with three options for generating funds: converting Class A common stock, distributing cash dividends, and redeeming shares. This financial move is part of the company’s strategic approach to bolster its balance sheet through Bitcoin investments.
In addition to this, MicroStrategy has been amassing approximately $21 billion in both equity and fixed-income instruments over the past few months through senior convertible notes and debt. It is anticipated that a new equity offering will occur during the current quarter, although MicroStrategy retains the flexibility to either proceed or withdraw depending on market conditions and other factors.
In simpler terms, if we say that perpetual preferred stock has priority over a company’s common stock, it implies that in case of liquidation or bankruptcy proceedings, this higher status provides an extra shield for those investors, ensuring they are paid off before the common stockholders receive any funds.
Strategy Behind MicroStrategy’s Bitcoin Approach
MicroStrategy currently holds approximately 446,400 Bitcoins in its financial records. In total, the company has invested around $43.9 billion in Bitcoin since initiating the program. On average, each Bitcoin was purchased at a price of $62,500 when the buying began. The company’s strategy for acquiring Bitcoin has been exceptionally successful according to its objectives. This year alone, it bought 257,250 Bitcoins, making this the largest purchase to date in the year 2024.
According to Michael Saylor, the executive chairman of the company, the policy that allows the holding of Bitcoins has significantly increased the company’s Bitcoin holdings and boosted stock prices. Shares in MicroStrategy (MSTR) climbed 13.2% to $339.6 on January 3, marking a 438% rise compared to the same time last year.
As the company proceeds with substantial investments in Bitcoin, this stock offering can be viewed as a significant stride towards fully integrating cryptocurrency into its business operations. This move reflects a growing trend in the marketplace that signifies the increasing institutionalization of digital currencies.
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2025-01-05 16:17