Microstrategy (NASD:MSTR) has announced its intent to offer $600 million in debt and use the proceeds to buy more Bitcoin. Microstrategy made headlines in a previous debt offering when the company did the same. In December, Microstrategy closed on an offering of $650 million of 0.750% convertible senior notes due 2025 using the net proceeds from the sale of the notes to purchase Bitcoin in accordance with its Treasury Reserve Policy.
Ostensibly, Microstrategy is a business intelligence company providing an enterprise analytics platform. The Bitcoin purchases have led some to view the company more as a proxy for Bitcoin as it balance sheet adds the world’s most popular crypto.
In a release, Microstrategy said convertible senior notes due 2027 will be unsecured, senior obligations of MicroStrategy, and will bear interest payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. The notes will mature on February 15, 2027, unless earlier repurchased, redeemed or converted in accordance with their terms. The notes will be convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of cash and shares of MicroStrategy’s class A common stock, at MicroStrategy’s election. Prior to August 15, 2026, the notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date. The interest rate, conversion rate, conversion price, and certain other terms of the notes will be determined at the time of pricing of the offering.
Meanwhile, Bitcoin has launched to new all-time highs topping $50,000 for a single BTC. At the beginning of 2021, Bitcoin traded at around $29,000 and thus has appreciated dramatically in just a few weeks. Some observers see the rise of Bitcoin as emblematic of the ongoing corporate adoption as firms like Tesla, which recently announced it had purchased $1.5 billion in BTC, add the crypto to their balance sheets. While some pundits describe Bitcoin as digital gold, and a good hedge on inflation, others view BTC as a spin of the crypto roulette wheel.
So how have shares in Microstragy performed since the beginning of 2021? On January 4th, Microstrategy traded at around $425 a share. Today, shares trade at over $990 a share – more than doubling in value. This is down from its 52 week high of $1315. If Bitcoin continues its epic march higher you may anticipate that shares in Microstrategy will move in the same direction. OF course, if Bitcoin sinks – you can expect the same.