MicroStrategy (Nasdaq: MSTR) Announced The company is preparing to significantly increase its bitcoin holdings by raising $2 billion through a new stock offering on the exchange. The announcement came after the market closed on Thursday, following a strong Q2 2024 earnings report, which showed a substantial increase in the company's assets.
MicroStrategy currently holds 226,500 btc, which the company acquired at an average price of $36,821 per btc, costing it a total of $8.3 billion. These holdings are now valued at approximately $14.4 billion, reflecting a massive appreciation in value.
MicroStrategy’s second-quarter financial results were strong, with the firm highlighting a “btc return” of 12.2% year-to-date. This new key performance indicator (KPI) is part of a broader strategy that targets a btc return of 4-8% annually over the next three years. The firm’s president and CEO, Phong Le, emphasized its continued commitment to btc, noting “an improved understanding of bitcoin and growing support for the ecosystem from bipartisan politicians and institutions,” especially during the recent bitcoin 2024 Conference in Nashville.
MicroStrategy CFO Andrew Kang detailed the financial maneuvers that facilitated the increase in btc holdings, including the issuance of $800 million in 2.25% convertible senior notes due 2032 and the early repayment of $650 million in convertible notes due 2025. These strategic financial decisions have allowed the company to increase its holdings by 12,222 btc since the start of the second quarter.
The company also announced a significant 10-for-1 stock split of its Class A and Class B common stock, effective in early August, which is expected to increase the liquidity of its shares.
Reactions to the announcement of massive bitcoin purchases
The potential future purchase of $2 worth of bitcoin was hidden within the official announcement with one sentence: “We continue to closely manage our common stock and are filing a registration statement for a new $2 billion equity offering program at the market.”
Reactions within the community have been predominantly positive, reflecting strong support for MicroStrategy’s aggressive bitcoin acquisition strategy. Will Clemente III, a prominent cryptocurrency analyst, expressed astonishment at the scale of the planned purchase. x.com/WClementeIII/status/1819110724339212441″ target=”_blank” rel=”noopener nofollow”>he stressed:“Shit, Saylor is trying to buy another $2 billion worth of btc.”
Matt (@matt_utxo), a well-known figure in the crypto x community, x.com/matt_utxo/status/1819111344387584041″ target=”_blank” rel=”noopener nofollow”>noted“MSTR estimates ~6.7% dilution to acquire ~31,000 bitcoins. Saylor & Co. continues its strategy of trading corporate stock in exchange for the hardest asset on Earth.”
Smeet Bhatt, founder of Theya bitcoin, x.com/smeet_bhatt/status/1819116507399704929″ target=”_blank” rel=”noopener nofollow”>acclaimed The strategy as a new paradigm of financial engineering, comparing Michael Saylor to legendary investor Warren Buffet. He stated: “Cumulative dilution is a completely new paradigm of financial engineering that MSTR has unleashed by shorting a perpetually devaluing currency in order to accumulate more cash. It has an inscrutable basis. Michael Saylor is the Warren Buffet of the 21st century.”
At press time, the bitcoin price had not reacted to the news. btc is up slightly by 0.1% over the past 24 hours and is trading at $64,732.
Featured image from YouTube, chart from TradingView.com
