MicroStrategy, led by Executive Chairman Michael Saylor, is ramping up its efforts to further solidify its position as a major bitcoin holder. In a bold move announced on January 3, the company revealed plans to raise $2 billion through the issuance of perpetual preferred stock. This innovative financing strategy marks a departure from previous methods, such as at-the-market (ATM) offerings and convertible bonds, as it provides long-term, stable capital for the company’s ongoing bitcoin acquisition initiative.
Perpetual preferred stock, which has no fixed maturity, offers the company flexibility while providing investors with fixed dividend payments. These shares are attractive to institutional investors like pension funds and banks due to their predictable return on investment and low volatility. The advantage of perpetual preferreds over convertible bonds, which have a shorter lifespan, is the extended duration that gives MicroStrategy greater stability in its capital structure.
Saylor emphasized the benefits of this new funding approach during a recent investor meeting at the ICR conference in Orlando. The decision to use perpetual preferred stock was motivated by its ability to act as an indefinite call option, offering the company capital without the pressure of a fixed repayment date. This strategy allows MicroStrategy to continue acquiring bitcoin without being hampered by short-term financial obligations.
The company’s bitcoin holdings continue to grow, with recent purchases adding 2,530 BTC to its total, bringing the grand total to 450,000 BTC. With these new assets, MicroStrategy is on track to further leverage its bitcoin position, reinforcing its commitment to the cryptocurrency market.
The terms of the perpetual preferred stock offering, which include dividend payments and the potential for conversion to common stock, are expected to be finalized by the end of Q1 2025. A Special Meeting for Shareholders is scheduled for January 21, where the board will vote on increasing the company’s authorized class A common stock and preferred stock.
Benchmark has maintained a positive outlook for MicroStrategy, setting a price target of $650 per share. Investors will also be closely watching the company’s Q4 earnings call, set for February 4, 2025, for further insights into the company’s financial performance and future plans.
