MicroStrategy, the largest corporate holder of Bitcoin, has unveiled plans to raise $2 billion through a perpetual preferred stock offering. The initiative aims to bolster its financial position and expand its Bitcoin reserves, aligning with the firm’s ambitious “21/21” strategy.
Details of the New Stock Offering
This offering is distinct from MicroStrategy’s broader plan to secure $21 billion in equity and $21 billion in fixed-income instruments, as noted in its January 3 statement. The company has previously used senior convertible notes and other debt mechanisms to fund its aggressive Bitcoin acquisition strategy.
Scheduled for the current quarter, the offering’s completion will depend on market conditions and company discretion. However, MicroStrategy stated that the offering might not proceed if circumstances change. Classified as “senior” to its Class A common stock, the offering gives holders priority during bankruptcy or liquidation scenarios.
Bitcoin Holdings and Acquisition Costs
MicroStrategy currently holds 446,400 Bitcoin, valued at $43.9 billion, according to Bitcoin Treasuries. This total includes 257,250 Bitcoin purchased in 2024, making it the company’s largest acquisition year. The average cost per Bitcoin is $62,500, resulting in a 57.2% gain on its investment.
Michael Saylor’s Leadership in Bitcoin Advocacy
Michael Saylor, the executive chairman of MicroStrategy, has been a vocal proponent of corporate Bitcoin adoption. Under his guidance, the company’s stock has surged 438% year-over-year, reaching $339.60 as of January 3. However, the announcement of the perpetual preferred stock offering caused a slight dip of 0.19%.
Execution Options for the Offering
MicroStrategy has outlined various methods to execute the offering. These include converting Class A common stock, paying cash dividends, or redeeming shares.
Stock Performance Amid Market Challenges
Despite notable gains earlier in the year, MicroStrategy’s stock (MSTR) has experienced a decline. After-hours trading on Monday saw shares drop below $300, representing a 46% fall from their November peak of $543. This decline follows growing concerns over the company’s ambitious $42 billion funding plan, which heavily relies on debt and equity.
Criticism of the “21/21” Strategy
The “21/21” plan, announced in October, seeks to raise $42 billion over three years through equity and fixed-income securities. Earlier this month, the company proposed increasing its Class A common shares by 10 billion and its preferred shares by one billion. Critics, including The Kobeissi Letter, have labeled this move a “lose-lose” scenario, arguing that shareholder dilution would harm existing investors, while rejection could limit the company’s ability to acquire Bitcoin through leverage.
Future Outlook for MicroStrategy
While MicroStrategy continues to aggressively accumulate Bitcoin, its stock performance highlights the challenges of balancing ambitious growth strategies with market dynamics. The company’s next steps in executing its funding and acquisition goals will likely shape its trajectory in the evolving cryptocurrency landscape.
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