MicroStrategy, the world's largest corporate holder of Bitcoin, has announced plans to raise $2 billion through a perpetual preferred stock offering to purchase additional Bitcoin and bolster its balance sheet.
The new offering, revealed on January 3rd, is part of the company's broader "21/21 Plan" - an ambitious strategy to raise $21 billion in equity and another $21 billion through fixed-income instruments over three years. The perpetual preferred stock would provide investors with regular dividends without a maturity date.
According to Dylan LeClair, Metaplanet's director of Bitcoin strategy, this innovative approach allows investors to gain exposure to Bitcoin's volatility while providing MicroStrategy with cost-effective funding. Even with a 6% annual dividend rate, the company would only need to pay $120 million yearly on the $2 billion raise.
The offering is expected to launch in the first quarter of 2025, subject to market conditions. The preferred stock will include provisions for conversion into class A common shares, cash dividend payments, and share redemption options. However, final terms and pricing remain undetermined.
MicroStrategy currently holds 446,400 Bitcoin valued at approximately $43.7 billion, with unrealized gains of about $16 billion. The company's aggressive Bitcoin acquisition strategy has propelled its stock price upward and secured its position in the Nasdaq 100 index.
While the strategy has proven successful so far, analysts note potential risks. The Kobeissi Letter points out that issuing new shares could dilute existing shareholder ownership and reduce earnings per share. The company's ability to secure ongoing funding remains critical to sustaining its Bitcoin acquisition strategy.
MicroStrategy plans to hold a shareholder meeting via webcast to vote on increasing its authorized common stock to 10.3 billion shares from 330 million and preferred stock to 1 billion shares from 5 million. The meeting will be open to stockholders of record as determined in 2025.