#MicroStrategy Raises $2 Billion#
Hot Topic Overview
Overview
MicroStrategy announced that it will issue $2 billion in perpetual preferred stock to purchase more Bitcoin. This is the fourth financing method MicroStrategy has employed, after cash, market issuance, and convertible bond issuance. Perpetual preferred stock does not have a fixed maturity date, giving MicroStrategy a longer duration, and the ability to attract large institutional investors with lower volatility and mid-single-digit yields. MicroStrategy plans to complete the issuance in the first quarter, and will hold a shareholder meeting on January 21st to vote on an increase to authorized Class A common stock and preferred stock.
Ace Hot Topic Analysis
Analysis
MicroStrategy announced it will issue $2 billion of perpetual preferred stock to buy more Bitcoin. This is the fourth way MicroStrategy has raised capital, after cash, market issuance and convertible debt issuance. Perpetual preferred stock has no maturity date, offers a fixed dividend, but has no voting rights. MicroStrategy chose to issue perpetual preferred stock because it has no maturity date, unlike convertible bonds which do, and can serve as an embedded perpetual call option. Perpetual preferred stock is attractive to large institutions, such as pension funds and banks, as they will receive stable and fixed dividend payments. MicroStrategy plans to complete the issuance in the first quarter, and the issuance terms include dividend payments, convertibility into Class A common stock, and stock redemption provisions. Benchmark maintained a Buy rating on MSTR with a price target of $650.
Public Sentiment · Discussion Word Cloud
Public Sentiment
Discussion Word Cloud
Classic Views
MicroStrategy will raise $2 billion through the issuance of perpetual preferred stock to fund the purchase of more bitcoin.
Perpetual preferred stock has no fixed maturity date, providing a longer term and a more stable capital structure for the company.
Perpetual preferred stock is attractive to large institutions like pension funds and banks because they will receive a steady and fixed dividend payment.
MicroStrategy's move indicates its long-term confidence in bitcoin and could encourage other companies to follow suit.