MicroStrategy Is Raising More Money to Buy Bitcoin

MicroStrategy recently launched its Series A perpetual preferred stock offering (STRK), offering a total of 7.3 million shares at $80 per share. That’s nearly three times the initial target of 2.5 million shares. The company estimates the total proceeds from the offering at $563.4 million.

MicroStrategy plans to use the funds for a variety of purposes, including continuing to buy more Bitcoin. As of today, the company holds 471,107 BTC, or more than $46 billion. Perpetual preferred stock has no maturity date or mandatory redemption schedule, instead paying fixed dividends indefinitely as long as the issuing company remains in business. The shares have a $100 per share liquidation preference and will accrue a fixed 8% annual dividend.

The quarterly dividend will only be paid if approved by MicroStrategy’s board of directors, and can be paid in cash, Class A common stock, or a combination of the two at the company’s discretion. The ability to convert to common stock provides an element of volatility and flexibility that preferred stock investors rarely have, according to Mark Palmer, senior equity analyst at Benchmark. Mizuho Securities believes that Bitcoin could rise another 30% over the next three years, and MicroStrategy (MSTR) shares will benefit from this trend.
They estimate that MicroStrategy will own 783,000 BTC by the end of 2027, with Bitcoin reaching $166,000, or a total value of about $130 billion. “We believe favorable market conditions are helping MSTR quickly surpass its target (having raised $3 billion/$18 billion in debt and equity since the October announcement),” Mizuho said in a note to clients on Thursday.

MicroStrategy shares are currently trading around $345 per share with a market capitalization of $85 billion, according to data from The Block. The stock has gained about 15% over the past month and nearly 600% over the past year.