MicroStrategy, a leading enterprise software company that has evolved into a Bitcoin (BTC) investment platform, has drawn attention once again with its latest purchase of $101 million in BTC.
The company, led by the chairman and co-founder Michael SaylorCommitted to using perpetual preferred stock, common shares, and debt to augment its ongoing Bitcoin purchase strategy.
MicroStrategy Eyes will raise $42 billion in capital by 2027
In A Filing Along with the US Securities and Exchange Commission (SEC), MicroStrategy disclosed that it purchased 1,070 Bitcoin tokens on December 30 and 31, 2024 at an average price of approximately $94,000.
This brings the company’s total bitcoin holdings to an impressive 447,470 BTC, which has been acquired for approximately $27.97 billion at an average price of $62,503 per bitcoin.
In particular, Saylor A Social media post At X (formerly Twitter), the company achieved a bitcoin yield of 48% for the fourth quarter of 2024 and 74.3% for the full fiscal year.
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MicroStrategy’s ambitious plans extend beyond Bitcoin acquisition. On Friday, the firm announced its intention to raise up to $2 billion through a perpetual preferred stock offering, which will have seniority over its Class A common stock.
The move is part of a larger strategy to raise $42 billion in capital through various avenues by 2027, including market stock sales and convertible debt offerings. With more than two thirds of it Equity goals Already met, the company is expected to move into fixed-income markets in the near future.
Demand for MicroStrategy’s stock (MSTR) has grown, particularly among hedge funds, which are employing variable arbitrage strategies that include bonds and short-selling shares.
This strategy capitalizes on the volatility of MicroStrategy’s stocks, a feature that has become the cornerstone of its business model. Benchmark analyst Mark Palmer commented:
This volatility itself is a key element of MicroStrategy’s approach as it enables the company to more easily tap into the capital markets and the convertible bond market in particular.
Microstrategy’s latest proposal to increase the number of authorized shares Class A common stock 330 million to 10.3 billion shares, sparking fears that the company’s stock price has fallen significantly.
MicroStrategy’s Bold Bitcoin Strategy Faces Headwinds
On the day of the proxy filing in December, shares fell 9.6%. Adam Kobesi, founder of Kobesi Letter, notes the dilemma faced by investors, is telling:
It’s a lose-lose because on the one hand you have people saying it’s thin and they’re selling stocks… but on the other hand you have people saying if it doesn’t pass, they’re going to buy bitcoin and stocks. can’t continue The entire investment strategy is broken.
A vote on the share increase is scheduled for January 21, 2025, with Saylor being an important shareholdersThe amendment is expected to be passed. Should it be approved, the increase in shares could cause more volatility in MicroStrategy’s stock price as the company becomes more leveraged.
Although the company has generally outperformed bitcoin, it has faced challenges in recent months, underscoring that its performance is influenced by factors other than just cryptocurrency prices.
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Despite recent volatility, Palmer maintains a “buy” rating on MicroStrategy’s stock. He believes the market’s reaction to the proposed share hike has been an overreaction.
“The company’s strategy has been to issue shares to make bitcoin purchases that can accumulate to the benefit of shareholders,” he commented.
MicroStrategy’s aggressive approach to bitcoin acquisitions has led to significant purchases of more than $1 billion in late 2024, although recent weeks have seen a slowdown in these activities amid bitcoin price volatility.
“We’ve seen the company’s strategy moving forward, which is not a sign of a slowdown … it’s more a reflection of the aggressive approach the company is taking,” Palmer reassured investors.
At the time of writing, the market-leading crypto is approaching the $100,000 milestone, trading at $99,340, up 2% in the past 24 hours.
Featured image from DALL-E, chart from TradingView.com
