#MicroStrategy Issues Perpetual Preferred Stock#
Hot Topic Overview
Overview
MicroStrategy announced the issuance of $2 billion in perpetual preferred stock, the company's fourth major tool for purchasing Bitcoin after cash, market issuance, and convertible bond issuance. Perpetual preferred stock has no fixed maturity date, offers a fixed dividend but no voting rights, and is attractive to large institutions such as pension funds and banks. MicroStrategy expects to complete the issuance in the first quarter, with terms including dividend payments, convertibility into Class A common stock, and stock redemption provisions. The company anticipates that the perpetual preferred stock will provide mid-single-digit yields with low volatility and no option market.
Ace Hot Topic Analysis
Analysis
MicroStrategy plans to issue $2 billion in perpetual preferred stock to raise funds for further Bitcoin purchases. This perpetual preferred stock has no fixed maturity date, with investors receiving a fixed dividend but no voting rights. MicroStrategy chose perpetual preferred stock due to its longer duration, which acts as an embedded perpetual call option, and its appeal to large institutions such as pension funds and banks. The terms of the perpetual preferred stock haven't been disclosed but are expected to be finalized in the first quarter, including dividend payments, convertibility into Class A common stock, and stock redemption provisions. Benchmark maintains a Buy rating on MSTR with a price target of $650. MicroStrategy recently bought 2,530 BTC, bringing its total holdings to 450,000 BTC. Next week, MicroStrategy's special shareholder meeting will be held on January 21st where investors will vote on increasing authorized Class A common stock and preferred stock. MSTR's fourth-quarter earnings call is scheduled for February 4th.
Public Sentiment · Discussion Word Cloud
Public Sentiment
Discussion Word Cloud
Classic Views
MicroStrategy issued perpetual preferred stock to raise funds to buy Bitcoin, which will be its fourth financing method after cash, market issuance and convertible bond issuance.
Perpetual preferred stock has no fixed maturity date and provides a stable dividend payment, making it attractive to large institutions such as pension funds and banks.
The advantage of perpetual preferred stock is that it has a longer term and can be used as an embedded perpetual call option, making the company less vulnerable.
Perpetual preferred stock has a moderate yield, low volatility, no option market, and is more attractive than convertible bonds.