#MicroStrategy Issues $2 Billion in Preferred Stock#
Hot Topic Overview
Overview
MicroStrategy announced it will issue $2 billion in perpetual preferred stock to buy Bitcoin. This is the fourth method of fundraising MicroStrategy has used, after cash, market issuance and convertible debt issuance. Perpetual preferred stock has no fixed maturity date and offers a fixed dividend payment but carries no voting rights. This instrument is attractive to MicroStrategy as it extends the maturity of its capital structure, making it less vulnerable. The perpetual preferred stock is expected to be issued at a mid-single digit yield and will be attractive to large institutions such as pension funds and banks. MicroStrategy's special shareholder meeting will be held on January 21st, where investors will vote to increase the authorized shares of Class A common stock and preferred stock.
Ace Hot Topic Analysis
Analysis
MicroStrategy announced it will issue $2 billion in perpetual preferred stock to raise funds to continue its Bitcoin purchases. This is the fourth funding method employed by MicroStrategy, following cash, equity offerings, and convertible debt issuance. Perpetual preferred stock has no fixed maturity date, and investors will receive a fixed dividend but will have no voting rights. MicroStrategy Executive Chairman Michael Saylor said the advantage of perpetual preferred stock is its longer maturity, which reduces the company's liquidity risk and provides investors with a "unique proposition." The terms of the perpetual preferred stock have not yet been disclosed, but are expected to be finalized 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 raises $2 billion in perpetual preferred stock to buy more Bitcoin.
Perpetual preferred stock has no fixed maturity date, providing a longer duration, reducing the company's liquidity risk and strengthening its capital structure.
Perpetual preferred stock offers investors a stable and fixed dividend payment, making it attractive to large institutions such as pension funds and banks.
Compared to convertible bonds, perpetual preferred stock has no option market, resulting in lower volatility and offering mid-single-digit yields.