MicroStrategy will invest another $3 billion in bitcoin

To raise funds, the company conducted a bond offering

22.11.2024 - 09:50

3 min

What’s new? Analytics software company MicroStrategy (MSTR), which is the largest holder of bitcoin on its own balance sheet among publicly traded firms, has completed another bond offering. Initially, the company planned to raise $1,75 billion, then the amount of the offering was increased to $2,6 billion with an option for the first buyers to purchase $400 million worth of securities.

Press release

What else is known? Thus, the company raised $3 billion in three days by selling convertible non-interest-bearing bonds maturing in 2029.

While the bonds do not offer a yield, they can be converted to cash at a premium to the share price at a ratio of 1,4871 MTSR per $1000. That is about $672 per share, which is 69% more than its current value.

MSTR stock is trading at $397,28 on the Nasdaq, having lost 16,2% overnight on the news of the offering. Month-to-date, the stock is up 83,8%, and since the beginning of the year, the securities are up 473,7%.

Analysts surveyed by Bloomberg called the high growth rate of MicroStrategy shares unreasonable

The company began investing in bitcoin in 2020, and since then, the value of its securities has risen by 1700%

As with previous offerings, MicroStrategy will use the proceeds to buy bitcoins.

“Our treasury strategy is designed to provide investors varying degrees of economic exposure to Bitcoin by offering a range of securities, including equity and fixed-income instruments,” the press release says.

MicroStrategy began regularly investing in bitcoin in December 2020 as an inflation hedge and has since accumulated 331 200 coins, or about 1,6% of the asset’s total supply, with a purchase price of $16,5 billion. At current exchange rates, the accumulation is valued at $32,84 billion, and the unrealized gain is $16,34 billion.

The company recently made the largest purchase of bitcoins both in terms of volume and value: 51 780 coins for $4,6 billion or $88 627 per coin.

It was also revealed that the number of institutional holders of MSTR grew by 11% during the quarter, with their total investment reaching $15,3 billion. Among them are banks Morgan Stanley, Goldman Sachs, and Bank of America.

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