MicroStrategy Doubles Down on Bitcoin Bet with $700M Debt Offering
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Software firm MicroStrategy is making another big move into Bitcoin. On Friday, the company said it would sell $700 million in convertible notes. The goal is to use the money to buy even more of the digital currency.
This comes after MicroStrategy already spent billions to amass over 214,000 bitcoins. That makes it the largest corporate holder of the cryptocurrency. The coins are currently worth around $14 billion.
MicroStrategy started purchasing Bitcoin in 2020 under its founder and chairman, Michael Saylor. He has become a major booster for the digital asset. By using Bitcoin as a reserve instead of cash, Saylor aims to protect the company’s value from inflation.
How Do Convertible Notes Work?
Convertible notes let MicroStrategy borrow money from investors now. In exchange, the investors have the option to convert the debt into MicroStrategy stock later on at an agreed price. The latest offering will pay 2.25% interest per year and come due in 2032.
MicroStrategy Announces Pricing of Offering of Convertible Senior Notes $MSTR https://t.co/ejEbX1a7P9
— Michael Saylor⚡️ (@saylor) June 14, 2024
The new fundraising is even bigger than MicroStrategy originally planned. The company upsized the deal by $200 million from the $500 million it first announced due to strong demand. Buyers also have the option to purchase an extra $100 million of notes in the next 13 days.
Bernstein Makes Bullish Prediction on MicroStrategy
Wall Street is bullish on the stock after the debt deal news. Brokerage firm Bernstein initiated coverage on Friday with an “outperform” rating. Its analysts predict MicroStrategy shares could climb to $2,890, nearly double the current price of around $1,500.
Bernstein believes the price of Bitcoin itself could soar to $1 million by 2033. It sees the cryptocurrency reaching $200,000 as early as 2025. Key drivers include demand from new bitcoin ETFs and the token’s limited supply.
JUST IN: $779 billion Bernstein says MicroStrategy is ‘building the world’s largest #Bitcoin company’ 👀 pic.twitter.com/pnqPSBh02I
— Bitcoin Magazine (@BitcoinMagazine) June 14, 2024
For now, MicroStrategy’s big borrowing gives it a way to acquire more bitcoin. At the same time, the long-term structure of the debt limits the risk that it will have to sell its crypto stash anytime soon. The bold strategy has made the company a major player in the Bitcoin market.
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