MicroStrategy, the largest corporate holder of Bitcoin, has unveiled plans to raise $2 billion through a perpetual preferred stock offering. The funds will be used to expand its Bitcoin holdings, pushing the company closer to achieving its ambitious “21/21” strategy, which centers on aggressive Bitcoin accumulation.
The company stated that the perpetual preferred stock offering may involve converting its class A common stock, paying cash dividends, redeeming shares, or combining these approaches. The offering, set to launch in Q1 2025, will depend on market conditions and other factors before being finalized.
Strategy to expand Bitcoin reserves
MicroStrategy has been exploring various methods to secure funding for its Bitcoin acquisition goals. Beyond the preferred stock offering, the company has plans to raise $21 billion through equity and another $21 billion through fixed-income instruments. These measures align with the company’s ongoing strategy to leverage innovative financial tools to expand its Bitcoin reserves.
In recent years, the company has issued senior convertible notes and taken on debt to fund a sustained Bitcoin purchasing spree. The upcoming preferred stock offering is intended to strengthen the firm’s financial position further and solidify its role as a leader in corporate Bitcoin investment.
Prioritizing stockholders amid financial risks
The perpetual preferred stock offering will be classified among the most privileged shares of MicroStrategy’s class A common stock. In the event of bankruptcy or liquidation, holders of this stock will have priority over other investors, as outlined by the company. This move underscores MicroStrategy’s efforts to balance aggressive Bitcoin acquisition with safeguards for investors.
While the preferred stock offering aims to bolster the firm’s Bitcoin reserves, MicroStrategy has emphasized that it retains the right to alter or cancel the plan based on prevailing market conditions.
Bitcoin holdings and financial performance
According to data from Bitcoin Treasuries, MicroStrategy currently holds 446,400 Bitcoins, valued at approximately $43.9 billion. The firm purchased an additional 257,250 BTC in 2024, marking its highest buying year. With an average purchase price of $62,500 per Bitcoin, MicroStrategy’s Bitcoin investment is up 57.2% overall.
The company’s focus on Bitcoin, spearheaded by Executive Chairman Michael Saylor, has significantly influenced its stock performance. On January 3, MicroStrategy’s shares (MSTR) climbed 13.2% to $339.6, representing a 438% increase over the past year. However, following the stock offering announcement, the share price dipped marginally by 0.19% in after-hours trading.