#MicroStrategy Issues Preferred Stock#
Hot Topic Overview
Overview
MicroStrategy announced plans to issue $2 billion in perpetual preferred stock to purchase more Bitcoin. This is the fourth method MicroStrategy has used to raise funds, after cash, market issuance, and convertible bond issuance. Perpetual preferred stock does not have a fixed maturity date, offers a fixed dividend but has no voting rights, which is attractive to large institutions such as pension funds and banks. MicroStrategy expects to complete the issuance in the first quarter and will vote on an increase in the authorized number of Class A common stock and preferred stock at its shareholder meeting on January 21.
Ace Hot Topic Analysis
Analysis
MicroStrategy plans to issue $2 billion in perpetual preferred stock to raise funds to buy more Bitcoin. This is the third major tool MicroStrategy has used after cash, market offerings and convertible bonds issuance. Perpetual preferred stock has no fixed maturity date, investors receive a fixed dividend but do not have voting rights, and the company can set redemption terms. Compared to convertible bonds, perpetual preferred stock has a longer maturity and can act as an embedded perpetual call option, making the company's capital structure more stable. Perpetual preferred stock is expected to offer mid-single digit yields, low volatility, and is attractive to large institutions such as pension funds and banks. MicroStrategy expects to complete the issuance in the first quarter, with terms including dividend payments, convertibility into Class A common stock and share redemption provisions. Benchmark maintains a buy rating on MSTR with a target price of $650.
Public Sentiment · Discussion Word Cloud
Public Sentiment
Discussion Word Cloud
Classic Views
MicroStrategy raised capital by issuing perpetual preferred stock to extend the maturity of its capital structure, reduce the company's vulnerability, and provide a longer-term funding source for its bitcoin investment.
Perpetual preferred stock has no fixed maturity date, offers stable dividend payments, and is attractive to large institutions such as pension funds and banks.
The perpetual preferred stock issuance will provide MicroStrategy with a more flexible funding source, enabling it to hold bitcoin for a longer period of time and benefit from its potential appreciation.
This move by MicroStrategy indicates the company's confidence in the long-term value of bitcoin and its desire to support its bitcoin investment strategy with a more stable funding source.