MicroStrategy has announced plans to increase its share issuance and debt to acquire $42 billion in Bitcoin, leveraging the cryptocurrency's price rise with a fresh strategy for the market.
MicroStrategy's New Share Issuance Strategy
A special shareholder meeting is set to approve changes to the company's equity issuance policy. MicroStrategy plans to increase its authorized Class A common stock from 330 million to 10.33 billion and its preferred stock from 5 million to over 1 billion shares, as stated in a recent SEC filing. This increase provides the company with more options for future financing needs, aligning with the 21/21 Plan announced in October.
Bitcoin Purchase Plans
In December, MicroStrategy bought 42,162 Bitcoins for more than $4 billion, marking the company's largest buying period so far. CEO Michael Saylor highlighted the approach of buying Bitcoin when prices are high to achieve the best returns, saying, “If you are not buying Bitcoin at the top, you are leaving money on the table.” The company reported a Bitcoin yield of 17.8% and plans for an annual yield of 6%-10% from 2025 to 2027.
Impact on Market and Company Stocks
The company's performance has improved due to Bitcoin's rising value, resulting in its addition to the Nasdaq-100 and possible consideration for the S&P 500. MicroStrategy, the biggest corporate holder of Bitcoin, stands out in the cryptocurrency world due to its bold buying strategy led by Saylor. There will be a pause in Bitcoin purchases in January because of a planned blackout period.
MicroStrategy's strategy to expand share issuance and actively purchase Bitcoin demonstrates the company's confidence in Bitcoin's future and draws attention to its investment approach despite market fluctuations.
