Table of Contents
According to a Bloomberg report, investor Michael Saylor of MicroStrategy may own nearly as many common shares to fund the company's Bitcoin acquisitions as market heavyweights Alphabet and Amazon.com combined.
Experts predict that on January 21, MicroStrategy's shareholder vote would approve a company-sponsored proposal to increase the authorized Class A common share count from 330 million to 10.3 billion.
Around 47% of the voting power is held by Saylor, who co-founded and served as chairman of the software company that has transformed into a leveraged Bitcoin proxy. The company started during the dot-com era.
In doing so, MicroStrategy would surpass all but four of the five biggest tech companies in the Nasdaq 100 Index in terms of outstanding shares: Nvidia, Apple, Alphabet, and Amazon.
In October, MicroStrategy announced its plan to acquire Bitcoin with $42 billion in capital over three years through an at-the-market share issuance program and debt sales.
Since then, the company has acquired tokens for 10 weeks in a row, virtually doubling its token holdings to more than $44 billion.
Investors would often be against such a planned share issuance because it reduces profits per share, equity for shareholders, and voting power.
Blockhead
Unless investors viewed this as necessary for the company's strategy realignment, the general public and present shareholders would probably view it negatively.
Investors might not care in this case. Since launching its Bitcoin acquisition plan in 2020, MicroStrategy's share price has increased by over 2,500%, making it a favourite on Wall Street.
During the same time period, the value of Bitcoin has climbed by around 800%.
Authorized and outstanding shares do not always match up. Nvidia has 80 billion authorized shares, whereas Alphabet has 300 billion.
Some of MicroStrategy's authorized shares, which exceed 10 billion, may remain unsold.
Despite having issued more than two-thirds of the allotted $21 billion worth of shares, MicroStrategy has only issued slightly more than 43 million shares through market sales since the plan began.
Shareholders are expected to accept an amendment on January 21 to increase the number of permitted preferred stock shares from 5 million to 1 billion.
The company developed and uses Bitcoin yield to assess its worth to shareholders. This metric tracks the change in Bitcoin holdings per diluted share over time, excluding changes in Bitcoin price. MicroStrategy pays out nonexistent dividends.
Despite MicroStrategy's success in acquiring Bitcoin through stock and fixed-income security offerings, the company has limited options, with just $6.5 billion remaining in equity offerings from its $42 billion strategy.
The software division, which is the company's backbone, has lost money for the last three quarters in a row.
According to Saylor's December interview with Bloomberg Television, the company's goal is to "create more sophisticated leverage." "
To approve the modifications regarding the increase in shares, a majority of the voting power of all outstanding common stock eligible to vote must be obtained.
On Tuesday, at 10 a.m New York time, there will be a shareholder meeting.
