MicroStrategy, a leading business intelligence firm, has recently announced its plans to expand its Bitcoin holdings through a public offering of Strike Preferred Stock (STRK). This move comes as part of the company’s ongoing efforts to increase its exposure to the flagship digital asset.
According to a statement released on January 27, MicroStrategy intends to issue 2.5 million shares of its Series A Perpetual Strike Preferred Stock, pending regulatory approval and prevailing market conditions. The proceeds from the offering will be used to support corporate operations, including the acquisition of Bitcoin and working capital.
Each share of the preferred stock carries a $100 liquidation preference and will accrue fixed-rate dividends, payable quarterly starting from March 31, 2025. Shareholders will have the option to receive these dividends in cash, Class A common stock, or a combination of both. Additionally, shareholders can convert their preferred stock holdings into Class A common stock under specific conditions.
MicroStrategy also has the right to redeem shares if the liquidation preference falls below 25% of the initial issue or in certain tax-related scenarios. The redemption prices will take into account any unpaid dividends or, in the case of tax-driven redemptions, the greater of the liquidation preference or a calculated average trading price.
This strategic move by MicroStrategy aims to provide investors with opportunities linked to the growth of Bitcoin while allowing the company to strengthen its treasury assets. Bitcoin analyst Dylan LeClair described the offering as a sophisticated financial tool that combines an 8% dividend yield with a 10:1 conversion ratio and a $1,000 strike price. He highlighted that the stock effectively functions as a perpetual call option, offering investors regular dividends without a maturity date.
In recent developments, MicroStrategy also announced the redemption of a $1.05 billion tranche of 2027 convertible senior notes. Investors have the option to redeem the notes at face value or convert them to Class A stock by February 24, 2025, at a conversion price of approximately $142 per share. Additionally, shareholders approved measures to increase the company’s authorized Class A shares from 330 million to 10.3 billion and preferred stock authorization from 5 million to 1 billion shares.
These initiatives are aimed at enhancing MicroStrategy’s financial flexibility to acquire more Bitcoin. The company is currently the largest corporate holder of BTC, with 471,107 BTC valued at nearly $50 billion in its treasury.
Overall, MicroStrategy’s strategic moves reflect its commitment to expanding its Bitcoin holdings and leveraging the potential of the digital asset to drive long-term value for investors.