MicroStrategy Aims to Increase Bitcoin Holdings with Additional $2 Billion Investment in Inventory

MicroStrategy, the leading corporate holder of Bitcoin, has announced intentions to raise an additional $2 billion through a perpetual preferred stock offering.

The proceeds are aimed at enhancing its balance sheet and further expanding its Bitcoin reserves, in line with the company’s ambitious “21/21” strategy.

This new offering is distinct from MicroStrategy’s ongoing plan to secure $21 billion in equity and $21 billion in fixed-income instruments, as detailed by the Bitcoin-focused business intelligence firm in a statement on January 3.

MicroStrategy Continues to Acquire More Bitcoin

In recent months, the company has utilized senior convertible notes and various debt instruments to finance its aggressive Bitcoin acquisition strategy.

The perpetual preferred stock offering is anticipated to occur within the current quarter, although its finalization is contingent upon market conditions and MicroStrategy’s judgment.

“MicroStrategy may decide not to proceed with or complete the offering at all,” the company stated.

The offering is classified as “senior” to its Class A common stock, providing holders with priority in the event of bankruptcy or liquidation.

Currently, MicroStrategy holds 446,400 Bitcoin, valued at $43.9 billion, according to Bitcoin Treasuries.

This includes 257,250 Bitcoin acquired in 2024 alone, representing its largest acquisition year to date.

The company’s average purchase price is $62,500 per Bitcoin, resulting in a 57.2% gain on its investment.

Analysis on $MSTR Preferred Stock Target Raise
*MicroStrategy to Target a Capital Raise of Up to $2 Billion of Preferred Stock*
link: https://t.co/cSLDnRw1Xp
(Very long post, trigger warning)
First, what’s a preferred stock? If you’d like a good primer, here’s a @PrestonPysh… pic.twitter.com/ggmVDko4kd

— Dylan LeClair (@DylanLeClair_) January 4, 2025

This bold Bitcoin strategy has been advocated by MicroStrategy’s executive chairman, Michael Saylor, who has been a prominent proponent of corporate Bitcoin adoption.

The approach has significantly benefited MicroStrategy’s stock, with shares surging 438% year-over-year to $339.6 on January 3.

However, shares experienced a slight decline of 0.19% following the announcement of the perpetual preferred stock offering.

MicroStrategy has outlined several methods through which the offering may be executed, including converting Class A common stock, paying cash dividends, or redeeming shares.

MicroStrategy Shares Down 46% from November Peak

MicroStrategy (MSTR) shares fell below $300 during after-hours trading on Monday, marking a significant 46% drop from their all-time high in November.

This decline occurred amid growing concerns regarding the company’s ambitious $42 billion investment strategy, which heavily relies on increased debt and equity to support its aggressive Bitcoin accumulation.

The sharp drop follows a year of remarkable gains, with MSTR up 342% year-to-date, primarily driven by Bitcoin’s 121% annual increase and the company’s extensive crypto purchases.

MicroStrategy’s latest acquisition added 2,138 BTC to its reserves, bringing its total holdings to 446,400 BTC.

Despite this, and the stock’s inclusion in the Nasdaq 100 index on December 23, MSTR has been on a steady decline since reaching a $543 intraday high on November 21.

The company’s “21/21” strategy, introduced in October, aims to raise $42 billion over three years by issuing $21 billion in equity and $21 billion in fixed-income securities.

Earlier this month, MicroStrategy proposed increasing its Class A common shares by 10 billion and preferred shares by one billion, a move that has drawn criticism.

The Kobeissi Letter characterized the proposal as a “lose-lose” situation, indicating that approval would dilute existing shareholders, while rejection would impede the company’s ability to purchase Bitcoin on leverage.

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