MicroStrategy, the software company known for buying bitcoin (BTC) and being the company that has the most in the world, has made a move expected by the market.
The company announced on Friday, January 3, 2025 that is aiming to raise $2 billion (USD) through the public sale of perpetual preferred shares. The offer will be filed with the United States Securities and Exchange Commission (SEC).
Perpetual preferred stock may include convertibility to its stock shares, payment of cash dividends, and provisions allowing for the redemption of shares, among other features.
“The purpose of the offering is to allow MicroStrategy to continue to strengthen its balance sheet and acquire more bitcoin,” the statement said.
MicroStrategy expects the offering to occur in the first quarter of 2025. However, the decision to complete this initiative is at your sole discretion and is subject to various factors such as market conditions. The company may choose not to continue with the offer if it so considers.
The initiative is in compliance with the 21/21 plan previously announced by MicroStrategy, which consists of raising USD 21 billion in capital and USD 21 billion in fixed income instruments, including debt, convertible notes and preferred shares, over the next three years.
At the moment, there has been no impact of the news on the price of MicroStrategy (MSTR) shares, given that the statement was released at the end of the week in the afternoon when the stock markets had already closed.
MSTR comes from a strong annual appreciation, despite recent decline
MSTR closed 2024 with an appreciation of 360%, despite the drop of almost 50% recorded in the last month of the year. As NoticiasVE reported, such price decline occurred in decorrelation with bitcoin, which at the same time had a slight appreciation.
According to the financial newsletter The Kobeissi Letter, the decorrelation occurred when MicroStrategy took on more debt and suggested increasing the number of authorized shares from 330 million to 10 billion. “The markets seem to be concerned about the possible approval of increasing the number of authorized shares,” he said.
According to the financial bulletin, If MicroStrategy increases the number of shares, the bears will say that this is a highly dilutive measure for existing shareholders. However, if it is not authorized, it clarifies that the company will not be able to continue buying bitcoin, which is why it considers it to be in a difficult situation.
Despite this dilemma, it is estimated in the bulletin that the probability of the MSTR stock increase being approved is high. This is based on the fact that the company’s founder, Michael Saylor, has 46.8% of the voting power, so if it obtains the support of only 4% of the remaining shareholders, it will be approved.
“Markets are already pricing it in,” commented The Kobeissi Letter. Although, other specialists, such as Markus Thielen, CEO of the cryptocurrency research firm 10x Research, have credited MSTR’s recent decline to its overvaluation levels, relative to BTC.
The bitcoin price ended 2024 with a rise of 120%, which is a lower performance than MSTR. According to Thielen, this led to strong profit-taking by MicroStrategy shareholders and lower demand, triggering its recent price decline.