#MicroStrategy Issues Preferred Stock#
Hot Topic Overview
Overview
MicroStrategy plans to issue $2 billion of perpetual preferred stock to raise funds to buy more bitcoin. This is the fourth funding method MicroStrategy has employed, following cash, market issuance, and convertible debt issuance. Perpetual preferred stock has no fixed maturity date, offers a fixed dividend, but does not have voting rights. MicroStrategy expects the perpetual preferred stock to offer a mid-single-digit yield and attract large institutional investors such as pension funds and banks. Issuance terms are expected to be announced in the first quarter, including dividend payments, convertibility into Class A common stock, and stock redemption provisions. Benchmark maintains a Buy rating on MicroStrategy with a price target of $650.
Ace Hot Topic Analysis
Analysis
MicroStrategy plans to issue $2 billion in perpetual preferred stock to raise funds to buy Bitcoin. This is the fourth financing method MicroStrategy has used, after cash, market offerings and convertible debt issuance. Perpetual preferred stock typically has no fixed maturity date, investors receive a fixed dividend but have no voting rights. The reason MicroStrategy chose to issue perpetual preferred stock is that it has a longer duration, can serve as an embedded perpetual call option, and is attractive to large institutions such as pension funds and banks. The terms of the perpetual preferred stock have not been announced yet, but are expected to be implemented in the first quarter, including dividend payments, convertibility to Class A common stock and stock redemption provisions. Benchmark maintains a Buy rating on MSTR with a price target of $650. MicroStrategy will vote on increasing its authorized Class A common and preferred stock at a special shareholder meeting next week.
Public Sentiment · Discussion Word Cloud
Public Sentiment
Discussion Word Cloud
Classic Views
MicroStrategy raises capital through issuance of perpetual preferred stock to buy more Bitcoin, which will extend the maturity of its capital structure and make it less vulnerable to market fluctuations in the future.
The advantage of perpetual preferred stock is that it has a long duration, no fixed maturity date, and can act as an embedded perpetual call option, providing the company with more flexibility.
Perpetual preferred stock is attractive to large institutions like pension funds and banks, as they will receive stable and fixed dividend payments.
The terms of MicroStrategy's perpetual preferred stock issuance have not been announced, but are expected to be completed in the first quarter and include dividend payments, convertibility into Class A common stock, and redemption provisions.