Michael Saylor, the co-founder and chairman of Strategy (previously known as Microstrategy), is ramping up efforts to acquire Bitcoin (BTC) by leveraging capital markets. He has unveiled intentions to issue up to $21 billion in preferred stock.
Strategy Announces Major Preferred Shares Offering
As reported by Bloomberg, the new offering will comprise 8% series A perpetual-strike preferred shares, which can be converted into class A common stock. The company intends to sell these shares via an “at the market offering” program, providing flexibility in both timing and pricing.
This strategy builds on a prior successful initiative in January, when Strategy generated $563 million by issuing preferred shares priced at $80 each, sold at a discount to their market value.
Preferred stocks are distinctive hybrid securities that fuse characteristics of both equity and debt, providing investors with a fixed dividend while granting a claim on company assets. The appealing terms of the January agreement reportedly garnered substantial investor interest, resulting in strong performance for the newly issued shares.
Since late October, Strategy has been consistently acquiring Bitcoin, and the recent capital raise is part of a larger plan to amass $42 billion over the coming years through various securities offerings.
This plan includes a concentration on selling fixed-income securities while managing common stock sales to finance further BTC acquisitions. Currently, the firm possesses approximately 499,096 Bitcoin, valued at around $42 billion.
Shares Experience 10% Drop Amid Bitcoin Decline
Despite this acquisition strategy, Strategy reported that it did not buy any Bitcoin between March 3 and March 9, according to a filing with the US Securities and Exchange Commission.
This pause occurs amid a fluctuating cryptocurrency market, where Bitcoin, the leading cryptocurrency, is currently trading at $79,000, down 4.5% for the day and about 18% over the month.
The preferred stock market has experienced mixed outcomes; although the shares rose 18% from their initial pricing, they faced a decline of over 6% in a recent trading session due to increased supply.
Despite these fluctuations, preferred shares have outperformed both common stock and Bitcoin during the same timeframe, indicating strong demand from investors.
As illustrated in the daily chart below, shares of Strategy (MSTR) also saw a drop of around 15% to $238 on Monday, mirroring broader market trends that have led to a roughly 10% decline in the company’s stock this year.
In contrast, shares have soared over 2,200% since Saylor began investing in Bitcoin as a hedge against inflation in 2020, while Bitcoin itself has increased by over 600%.
The announcement of Strategy’s plans aligns with recent actions from the US government. President Donald Trump has signed an executive order to establish a strategic US Bitcoin reserve, which will be funded through cryptocurrencies confiscated in legal proceedings.
Featured image from DALL-E, chart from TradingView.com
