Technology company MicroStrategy has announced its third debt offering of 2024, aiming to raise $700 million by issuing convertible senior notes due in 2028.
Purpose of the Debt Offering
MicroStrategy intends to use the proceeds to pay off $500 million in existing senior secured notes and to purchase more Bitcoin, with any remaining funds going to general corporate purposes. Refinancing is a common practice among companies, involving replacing existing debt with new debt to take advantage of more favorable terms.
Terms of the Offering
The notes will be unsecured and pay interest beginning in March 2025. The offering is available only to qualified institutional buyers. This is MicroStrategy's third debt offering of 2024, following a $700 million raise in March and a $500 million issuance of convertible senior notes maturing in 2032 in June.
Financial Results and Stock Impact
MicroStrategy continues to leverage debt raises to acquire Bitcoin and is one of the largest public holders of the cryptocurrency. As of September 13, 2024, the company holds 244,800 BTC worth around $14 billion. The large amount of Bitcoin has significantly impacted the company's financials. In the second quarter of 2024, MicroStrategy posted a net loss of $102.6 million or $5.74 per share, largely due to a $180.1 million digital asset impairment. Despite concerns from analysts about the company's exposure to Bitcoin, its stock has surged nearly 295% over the past 12 months, reaching $134 as of September 16. So far in 2024, MicroStrategy shares have gained 96%.
MicroStrategy continues to actively use debt offerings to raise funds and acquire Bitcoin, despite the significant volatility and risks associated with the cryptocurrency. The company's financial results remain closely tied to the volatility of the digital asset market.
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