Bitcoin
MicroStrategy will buy more Bitcoin and plans to raise $500 million
Key Takeaways
- MicroStrategy will buy more bitcoins and is raising debt to finance this purchase.
- The company is offering $500 million in convertible senior notes to institutional buyers.
- MicroStrategy already holds around $14 billion in bitcoins on its balance sheet.
Microstrategy (MSTR) is looking to add more bitcoin (Bitcoin) to its stock and is raising $500 million in debt to facilitate the purchase, along with other corporate purposes, the company announced Thursday.
The debt offering consists of convertible senior notes due in 2032 and will be open to qualified institutional buyers (QIBs), with a 13-day option for initial investors to purchase up to an extra $75 million in notes. These senior unsecured notes will bear interest semi-annually, beginning December 15, 2024, until maturity, unless repurchased, redeemed or converted at an earlier date.
MicroStrategy Bitcoin Bet
MicroStrategy has become famous for its bitcoin-focused strategy in recent years, led by its former CEO and current executive chairman Michael Saylor.
As of April 26, the company owned 214,400 bitcoins which, at today’s prices, assuming no change in the size of the holding, would be valued at around $14 billion. Any bitcoin purchases in the second quarter would represent 15 consecutive quarters for the company buying cryptocurrency.
Although other companies like Tesla (TSLA), Block (SQUARE) and, more recently, Semler Scientific (SMLR) confirmed the purchase of crypto, none of them have a bitcoin supply even close to the size of MicroStrategy’s.
And in that sense, the shares of none of the other companies investing in bitcoin correlate with bitcoin prices as much as MicroStrategy Stock he does. Although the bitcoin and MicroStrategy price trend lines appear to move in tandem in the chart below, MicroStrategy shares have been ahead of the cryptocurrency since February, roughly coinciding with the company’s Feb. 26 announcement to add 3,000 bitcoins to its portfolio.
Year to date, bitcoin prices are up about 50%, while MicroStrategy shares have more than doubled.
Trading View
But this correlation also works negatively. The price of bitcoin fell around 6% last week despite a short-term recovery following the release of Wednesday’s Consumer Price Index (CPI) data for May. MicroStrategy shares are down 9% over the same period.