MicroStrategy has announced that it plans to raise $2 billion more through a perpetual preferred share offering.
The company plans to use the funds to improve its balance sheet, and increase its Bitcoin holdings in line with its ambitious “21/21 plan”.
, a Bitcoin-stacking firm that provides business intelligence services, explained‘s new offering in a statement on Jan. 3.
MicroStrategy continues to buy more Bitcoin
In recent months, the company used senior convertible notes as well as other debt instruments to finance its aggressive Bitcoin acquisition strategies.
The perpetual preferred stock offer is expected to be completed within the current quarter. However, its final completion will depend on market conditions and MicroStrategy’s discretion.
The company said that MicroStrategy could decide not to continue with the offering or complete it at all.
The offering is classified as “senior”, giving priority to holders in the event of bankruptcy or liquidation.
According to Bitcoin Treasuries, MicroStrategy currently owns 446 400 Bitcoins, worth $43.9 billion.
The largest purchase year is 2024, with 257 250 Bitcoins.
The average cost of Bitcoin acquisition for the company is $62,500, resulting in a return on investment of 57.2%.
Michael Saylor, MicroStrategy’s executive chairman and a long-time advocate of corporate Bitcoin adoption, has championed this bold Bitcoin strategy.
MicroStrategy stock has risen 438% in the past year to $339.6.
The shares fell by 0.09 % after the announcement of perpetual preferred stock.
MicroStrategy outlines multiple ways to execute the offering, including converting class A common stock, distributing cash dividends or redeeming shares.
MicroStrategy shares down 46% since November peak
MicroStrategy’s (MSTR), shares dropped below $300 in after-hours trade on Monday. This marked a 46% drop from their November high.
The company’s aggressive Bitcoin acquisition strategy is heavily reliant on debt and equity, which has led to growing concerns about the company’s $42 billion funding plan.
MSTR’s sharp drop follows an impressive year of gains. The company has risen 342% in the past year, driven largely by Bitcoin’s annual growth of 121% and its extensive purchases of crypto.
MicroStrategy’s latest acquisition, which added 2,138 BTC, brought its total holdings up to 446 400 BTC.
MSTR’s stock has continued to decline despite its inclusion in the Nasdaq 100 Index on December 23. It had reached a high of $543 on the intraday on November 21, but since then, it has steadily declined.
The “21/21 strategy” announced by the company in October aims to raise 42 billion dollars over three years through the issuance of $21 billion equity and fixed income securities.
MicroStrategy has proposed to increase its Class A Common Shares of 10 billion dollars and preferred shares of 1 billion. This move, which sparked some criticism, was made earlier this month.
The Kobeissi Letter called the proposal a “lose/lose” scenario. It stated that approval of the proposal would dilute the existing shareholders while rejecting it would hamper the company’s capability to purchase Bitcoin using leverage.
