MicroStrategy Aims to Strengthen Balance Sheet with $2 Billion Stock Sale

MicroStrategy unveils a perpetual preferred stock of $2bn for enhancing its balance sheet as well as to increase its Bitcoin investments

Bitcoin was a dominant investment for the company as a result of this strategy and the company held 446,400 BTC which is valued at roughly $43.9 billion.

with a 46% stake loss since November, MicroStrategy is adamant about implementing its $42 billion ‘21/21’ funding program to acquire more Bitcoin assets

MicroStrategy, the largest corporate shareholder in Bitcoin, rolled out plans to issue up to $2.0 billion worth of perpetual preferred stock. This decision aims to improve its balance sheet while enabling the firm to achieve its target of buying even more BTC

The announcement comes from MicroStrategy which relies on an aggressive acquisition of Bitcoin as is common knowledge. , as announced in a Jan 3 release, this offering is not part of the corporation’s “21/21” plan attracting $42 billion through equity and fixed-income instruments

Key Details of the Stock Offering

The perpetual preferred stock offering is expected to occur within the first quarter of 2025. However, MicroStrategy emphasized that the offering’s execution remains subject to market conditions and internal discretion

If successful, the offering will rank senior to the company’s Class A common stock, providing priority claims for investors in cases such as bankruptcy or liquidation

Current Bitcoin Holdings

MicroStrategy currently holds 446,400 Bitcoins, valued at $43.9 billion according to Bitcoin Treasuries. The company acquired 257,250 Bitcoin in 2024 alone, marking its most aggressive purchasing year

These acquisitions have been financed primarily through senior convertible notes and other debt instruments. With an average purchase price of $62,500 per Bitcoin, MicroStrategy has achieved a 57.2% gain on its investment, underscoring the financial success of its strategy

MicroStrategy’s bold Bitcoin accumulation strategy has significantly influenced its stock performance. It has been on a roller coaster for the past year; its stocks rose by 438% and were priced at $339.60 on January 3

But when the company launched the stock offering the share declined by 0.19 %. Further, there was a further drop in the stock price to below $300 during after-hours trading on January 3 from a peak of $543 in November, down by 46 percent

Challenges and Criticism

Even though it has benefited from a massive appreciation in the value of its bitcoin holdings, MicroStrategy struggles to achieve its “21/21” funding plan. The plan known as the plan to mobilise $21 billion each through equity and fixed-income securities over the next three years has received criticism

More recently, it planned to issue 10 billion more Class A common shares and one billion preferred shares. It has been met with some disbelief, and some analysts are suggesting that this may lead to shareholder dilution or a restriction of future Bitcoin purchases

Speaking of MicroStrategy, Michael Saylor, its executive chairman, continues to express support for corporate Bitcoin acquisition. He has been at the helm in overseeing the conversion to a crypto-focused company