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Key Takeaways
- MicroStrategy will purchase more bitcoin and is raising debt to finance that buy.
- The company is offering $500 million in convertible senior notes to institutional buyers.
- MicroStrategy already holds roughly $14 billion worth of bitcoin on its balance sheet.
MicroStrategy (MSTR) is looking to add more bitcoin (BTC) to its stash, and is raising $500 million in debt to facilitate the purchase, along with other corporate purposes, the company announced Thursday.
The debt offering consists of convertible senior notes due in 2032, and will be open to qualified institutional buyers (QIBs), with a 13-day option for initial investors to acquire up to an extra $75 million in notes. These unsecured senior notes will bear interest semiannually, starting Dec. 15, 2024, till maturity, unless they are repurchased, redeemed, or converted at a prior date.
MicroStrategy’s Bitcoin Bet
MicroStrategy has become infamous for its bitcoin-focused strategy in recent years, led by its former CEO and current Executive Chairman Michael Saylor.
As of April 26, the company owned 214,400 bitcoins that at today’s prices, assuming no change in the size of the holding, would be valued at roughly $14 billion. Any bitcoin purchases in the second quarter would make it 15 consecutive quarters of the company buying the cryptocurrency.
Though other companies such as Tesla (TSLA), Block (SQ), and, more recently, Semler Scientific (SMLR) have confirmed buying crypto, none has a bitcoin hoard even close to the size of MicroStrategy’s.
And, to that effect, stocks of none of the other bitcoin-investing companies exhibit correlation with bitcoin prices as much as MicroStrategy stock does. While the price-trend lines for bitcoin and MicroStrategy seem to move in tandem on the chart below, MicroStrategy stock has raced ahead of the cryptocurrency since February, pretty much coinciding with the company’s Feb. 26 announcement of adding 3,000 bitcoins to its portfolio.
Year-to-date, bitcoin prices have gone up roughly 50%, while MicroStrategy stock has more than doubled.
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But that correlation also works in a negative way. The bitcoin price is down roughly 6% over the past week, despite a short-lived recovery following the release of Wednesday’s Consumer Price Index (CPI) data for May. MicroStrategy stock dropped 9% over the same period.