#MicroStrategy Issues $2 Billion in Preferred Stock#
Hot Topic Overview
Overview
MicroStrategy announced it will issue $2 billion of perpetual preferred stock to raise funds to buy more Bitcoin. This is the fourth method of fundraising MicroStrategy has employed, after cash, market offerings, and convertible debt offerings. Perpetual preferred stock has no fixed maturity date, provides a fixed dividend, but carries no voting rights. MicroStrategy chose to issue perpetual preferred stock because of its long duration, which serves as an embedded, perpetual call option, and reduces the company's financial pressure from debt maturities. The perpetual preferred stock is expected to provide a mid-single-digit yield and appeal to large institutional investors such as pension funds and banks. MicroStrategy plans to complete the issuance in the first quarter, but specific terms have not been disclosed.
Ace Hot Topic Analysis
Analysis
MicroStrategy plans to issue $2 billion in perpetual preferred stock to raise funds to buy more bitcoin. This is the fourth way MicroStrategy has raised funds after cash, market issuance, and convertible bond issuance. Perpetual preferred stock has no fixed maturity date and can be held indefinitely by the company, which receives a fixed dividend but has no voting rights. The advantages of this approach include a longer term, the ability to act as an embedded perpetual call option, and attractiveness 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. Benchmark maintains a buy rating on MSTR with a price target of $650.
Public Sentiment · Discussion Word Cloud
Public Sentiment
Discussion Word Cloud
Classic Views
MicroStrategy raises funds through the issuance of perpetual preferred stock to buy more Bitcoin, which will extend the maturity of its capital structure and make it less susceptible to market fluctuations in the future.
The advantage of perpetual preferred stock is that it has a longer maturity, no fixed maturity date, and can be used as an embedded perpetual call option, providing the company with a more stable source of funds.
Perpetual preferred stock is attractive to large institutions such as pension funds and banks because they will receive stable and fixed dividend payments.
MicroStrategy's issuance of perpetual preferred stock will provide it with more funds, allowing it to continue to increase its Bitcoin holdings and solidify its position as a Bitcoin treasury company.