MicroStrategy makes a big move: $1.75 billion convertible bonds to acquire more Bitcoin!

JIN10
2024.11.19 07:52
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MicroStrategy plans to issue $1.75 billion in 0% convertible bonds, with the funds intended for purchasing more Bitcoin. The company's stock price rose 13% on Monday, reaching an all-time high. Since November 5, MicroStrategy's stock price has increased by over 65%, primarily driven by the rise in Bitcoin prices. The company has raised approximately $6.6 billion for Bitcoin purchases through stock sales since October 31. The new bond issuance is part of its "21-21 Plan," which aims to issue $21 billion in stocks and bonds over the next three years

MicroStrategy (MSTR.O) stock price rose 13% on Monday, closing at $384.79, having reached an all-time high earlier in the day.

MicroStrategy is leveraging its soaring stock price to issue a $1.75 billion convertible bond, planning to use the proceeds to purchase more Bitcoin.

After the trading session on Monday, MicroStrategy announced plans to privately issue a batch of zero-coupon convertible bonds to qualified institutional investors under Rule 144A of the Securities Act of 1933. This transaction could become one of the largest in the convertible bond market this year.

The company had previously issued $1 billion in convertible bonds at the end of September, making it one of the largest issuers in the hybrid securities market.

MicroStrategy's stock price rose 13% to $384.79 on Monday, having reached an all-time high earlier in the day. Since the election on November 5, the stock has increased by more than 65%, primarily driven by Bitcoin's rise of over 30%. Bitcoin was trading close to $92,000 on Monday evening, up 3% on the day. Year-to-date, MicroStrategy's stock price has surged more than sixfold.

MicroStrategy has been aggressively purchasing Bitcoin this month, raising approximately $6.6 billion through stock sales since October 31, and using those funds to buy an equivalent amount of Bitcoin. The company announced its latest Bitcoin purchase earlier on Monday, with the $4.6 billion purchase funded by equity sales.

The issuance of convertible bonds by MicroStrategy is part of its "21-21 Plan." Under this plan, the company will issue $21 billion in stocks and bonds over the next three years to fund Bitcoin purchases.

MicroStrategy's new convertible bonds have a zero interest rate, thanks to strong market demand for the securities. Most convertible bonds have positive interest rates. One reason for the high demand is the high volatility of MicroStrategy's stock, making the convertible bonds very attractive to convertible bond arbitrageurs. These arbitrageurs typically buy convertible bonds and short the company's stock. MicroStrategy is one of the most volatile major stocks in the market.

Affected by short selling from arbitrageurs before the convertible bond transaction, the company's stock price fell 1% in after-hours trading to $381.

MicroStrategy has a market capitalization of approximately $86 billion, nearly three times the value of its 331,200 Bitcoin holdings. The company is the largest corporate holder of Bitcoin globally, owning over 1.5% of the total supply.

MicroStrategy believes that issuing stocks and convertible bonds to purchase Bitcoin creates value for shareholders

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