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MicroStrategy, the software company turned Bitcoin-centric enterprise, has announced plans to raise up to $2 billion through public underwritten offerings of perpetual preferred stock in the first quarter of 2025.
The funds will bolster its balance sheet and further its Bitcoin acquisition strategy as part of its ambitious "21/21 Plan," the company said.
The perpetual preferred stock, senior to MicroStrategy’s class A common stock, may include features such as convertibility, cash dividends, and redemption provisions.
MicroStrategy’s Bitcoin-Centric Strategy
This announcement comes as no surprise, given MicroStrategy’s relentless commitment to Bitcoin. As of December 2024, the company holds an impressive 444,262 BTC, purchased for a cumulative $27.7 billion at an average price of $62,257 per Bitcoin. Michael Saylor, Executive Chairman and Bitcoin evangelist, continues to advocate for Bitcoin as the ultimate reserve asset, despite concerns over the company’s significant debt exposure.
The 21/21 Plan, unveiled last year, aims to raise $21 billion through equity and another $21 billion via fixed income instruments over three years. The capital infusion will support MicroStrategy’s dual goals: aggressive Bitcoin accumulation and strengthening its financial resilience in a volatile market.
Market Reactions and Challenges
MicroStrategy’s reliance on Bitcoin has drawn both admiration and skepticism. Proponents, including Anthony Scaramucci of SkyBridge Capital, have praised the company’s long-term debt structuring and unwavering Bitcoin strategy. Critics, however, warn of potential vulnerabilities, particularly if Bitcoin's price were to face prolonged downturns.
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Bitcoin’s inherent volatility has led some analysts to question whether MicroStrategy can sustain its aggressive strategy without jeopardizing its financial stability. The company’s $7.2 billion in outstanding convertible debt, coupled with this new $2 billion preferred stock offering, underscores its high-stakes commitment to Bitcoin.
"While the company’s accelerated buying strategy has pressured its stock price—dropping from $480 to $340—it remains a bullish catalyst for Bitcoin in the short term. However, the sustainability of a MicroStrategy-led bull run remains uncertain in the long term," BRN analyst Valentin Fournier said in a note on Monday.
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