Bitcoin billionaire Michael Saylor revealed on Thursday that MicroStrategy (MSTR), his Bitcoin development and business intelligence software company, is implementing a 10-for-1 stock split.
MicroStrategy Targets Accessibility With 10-for-1 Split
A stock split involves a company dividing all outstanding shares of its stock into smaller units. This approach can benefit companies with high-valued individual shares, making their stock more accessible to smaller investors.
According to a Thursday press release from MicroStrategy, “The stock split will be executed by issuing a stock dividend to the holders of record of MicroStrategy’s class A common stock and class B common stock as of the close of business on August 1, 2024, the record date for the dividend.” This dividend will grant nine additional shares of Class A and Class B stock to all MSTR investors for each share they own.
The split is set to occur after trading closes on August 7. Trading will resume on a split-adjusted basis on August 8. While a stock split does not alter an investor’s total stake in the company, it significantly dilutes the value of individual shares. This can appear alarming on a stock price chart without proper context.
Joe Burnett, Senior Product Marketing Manager at Unchained, commented on the split. He said, “Now the plebs will soon be able to afford to play the MSTR call option game.” He added that market makers will sell these call options and hedge their positions by purchasing thousands, possibly millions, of shares.
MSTR: The High-Flying Bitcoin Stock
On Wednesday, MSTR shares closed at $1305. This represents the minimum threshold to gain exposure to the company. The stock reached a peak of $1919 in late March. Following Thursday’s announcement, it jumped 5% in pre-market trading to $1364.
Over the past year, MicroStrategy’s stock has surged by 216%. It serves investors as a leveraged alternative to buying Bitcoin. Recently, the company acquired a significant amount of Bitcoin, raising $800 million in its latest convertible debt sale. Currently, MicroStrategy holds 226,331 BTC ($13.33 billion) on its balance sheet, using debt and share dilution to fund these purchases.
According to Google Finance, MicroStrategy’s market cap stands at $23.16 billion. This indicates it is trading at a substantial premium to the value of its Bitcoin holdings. In March, Kerrisdale Capital criticized this premium as “unjustifiable,” calling for a 50% reduction in the stock value relative to its BTC holdings.
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