MicroStrategy Ramps Up Bitcoin Purchases, Announces Early Redemption of Convertible Notes
MicroStrategy (MSTR) has acquired $1.1 billion worth of Bitcoin (BTC-USD) after announcing plans for the early redemption of convertible notes and securing shareholder approval to expand its authorized common share count.
Bitcoin Acquisitions
The Virginia-based enterprise software provider has now purchased Bitcoin for 12 consecutive weeks, amassing over 2% of the total supply. Since Donald Trump's election, Co-founder and Chairman Michael Saylor has been aggressively accumulating Bitcoin, hailing Trump as "The 1st Bitcoin President."
MicroStrategy purchased 10,107 BTC tokens at an average price of $105,596 between January 21 and 26, as disclosed in an SEC filing. Its Bitcoin holdings now stand at approximately $47 billion.
Capital Raising
To fund its Bitcoin acquisitions, the company has utilized at-the-market stock sales and convertible debt offerings. Hedge funds have been actively involved in convertible arbitrage strategies, purchasing MicroStrategy's bonds and selling its shares short, capitalizing on underlying stock volatility.
Early Redemption of Convertible Notes
Over $1 billion of convertible notes will be redeemed ahead of schedule. MicroStrategy announced the redemption of its outstanding 0% Convertible Senior Notes due in 2027 on February 24. Conversion reflects a price of $142.38 per Class A common share, with shares closing at $353.67 on Friday.
Analyst Mark Palmer of Benchmark believes this move will alleviate potential obstacles to executing MicroStrategy's strategy, allowing investors to focus on the company's core operations. Additionally, it could enable the company to raise further capital.
Shareholder Approval
MicroStrategy recently secured shareholder approval to increase the number of Class A shares by 30-fold, allowing it to boost authorized shares from 330 million to 10.3 billion. The company also expanded its authorized preferred stock count from 5 million to 1 billion.
This expansion provides MicroStrategy with flexibility to raise additional capital through perpetual preferred stock and potential equity offerings, potentially facilitating further Bitcoin purchases and covering expenses without the need to sell tokens.