MicroStrategy sees strong demand for preferred stock plan, raises $563.4 million to fuel more bitcoin purchases

Quick Take

  • On Monday, MicroStrategy launched its convertible preferred stock offering available to institutional investors and select retail investors.

Business intelligence company MicroStrategy announced the pricing of its Jan. 30 offering by selling 7.3 million shares of 8% Series A perpetual strike preferred stock, also known as STRK, at a public offering price of $80 per share. That's nearly threefold of the 2.5 million shares the company intended to offer.

MicroStrategy estimates the net proceeds from the offering will be $563.4 million. The company intends to use these proceeds for general corporate purposes, including acquiring more Bitcoin. As of Jan. 27, MicroStrategy held 471,107 BTC worth over $46 billion.

Perpetual preferred stock doesn’t have a maturity date or a mandatory redemption timeline; instead, it pays fixed dividends indefinitely as long as the issuing company remains operational.

The perpetual strike preferred stock will have a liquidation preference of $100 per share and will accumulate cumulative dividends at a fixed rate of 8% per annum. Regular quarterly dividends on perpetual strike preferred stock will be paid only if declared by MicroStrategy’s board. Payments may be in cash, Class A common stock or both at the company’s discretion.

Being able to convert into common shares provides these preferred stock investors with elements of volatility and optionality that they don't often see, Benchmark senior equity analyst Mark Palmer said earlier this month.

Mizuho Securities says bitcoin's price has room to run another 30% in the next three years and expects MicroStrategy's stock (MSTR) to benefit.

"We believe favorable market conditions put MSTR on a fast track to exceed targets (already raised $3bn/$18bn of debt/equity since October announcement)," Mizuho wrote to clients on Thursday in a note. They estimate MSTR bitcoin holdings of 783,000 at a $166,000 market price by the end of 2027, which implies a $130 billion value.

MicroStrategy's stock trades around $345 per share with a $85 billion market cap, according to The Block's MSTR price data. Shares are up about 15% over the past month and nearly 600% over the past year.


Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Jason is a U.S. news editor at The Block. He previously worked as a staff writer and later served as managing editor at Benzinga, a financial news and data company. He led Benzinga's daily markets coverage as well as the expansion of the outlet's cannabis, cryptocurrency and sports betting verticals. He earned a bachelor's degree in journalism from Central Michigan University and resides in the suburbs of Detroit, Michigan. Follow him on X @JasonShubnell.

Editor

To contact the editor of this story:
Lawrence Lewitinn at
[email protected]

WHO WE ARE

The Block is a news provider that strives to be the first and final word on digital assets news, research, and data.

+ Follow us on Google News
Connect with the block on