#MicroStrategy Issues Perpetual Preferred Stock#
Hot Topic Overview
Overview
MicroStrategy plans to issue $2 billion in perpetual preferred stock to further purchase Bitcoin. This is the fourth financing method MicroStrategy has employed after cash, market issuance, and convertible bond issuance. Perpetual preferred stock has no fixed maturity date, provides a fixed dividend, but does not have voting rights. MicroStrategy chose to issue perpetual preferred stock because of its longer term, which can serve as an embedded perpetual call option, and its ability to reduce pressure on the company from debt maturity. Perpetual preferred stock is expected to offer mid-single-digit yields and attract large institutional investors such as pension funds and banks. Currently, the terms of the perpetual preferred stock are not yet disclosed, and the issuance is expected to be completed in the first quarter.
Ace Hot Topic Analysis
Analysis
MicroStrategy announced plans to issue $2 billion in perpetual preferred stock to continue its Bitcoin purchases. This is the fourth financing method MicroStrategy has used, after cash, market issuance, and convertible bond issuance. Perpetual preferred stock has no fixed maturity date, offers a fixed dividend, but no voting rights. MicroStrategy chose to issue perpetual preferred stock because of its longer duration, which serves as an embedded perpetual call option, and because it reduces pressure on the company from debt maturities. Perpetual preferred stock is attractive to large institutions such as pension funds and banks, as they provide a stable and fixed dividend payment. The specific terms of the perpetual preferred stock have not yet been announced, but the issuance is expected to be completed in the first quarter. Benchmark maintains a Buy rating on MicroStrategy with a target price of $650.
Public Sentiment · Discussion Word Cloud
Public Sentiment
Discussion Word Cloud
Classic Views
MicroStrategy issues perpetual preferred stock to raise funds to buy Bitcoin, which will be its fourth fundraising method after cash, market issuance and convertible bond issuance.
Perpetual preferred stock has no fixed maturity date, providing longer term and embedded perpetual call options for the company.
Perpetual preferred stock has a moderate yield and low volatility, making it attractive to large institutions such as pension funds and banks, as they can receive stable and fixed dividend payments.
The terms of the perpetual preferred stock have not been disclosed yet, but are expected to be implemented in the first quarter, including dividend payments, convertibility to Class A common stock and stock redemption provisions.