MicroStrategy, the leading enterprise software company that has become a Bitcoin (BTC) investment platform, has once again attracted attention with its latest purchase of $101 million in BTC.
The company is led by a chairman and co-founder Michael Saylorhas committed to using perpetual preferred stock, common shares, and debt to fuel their ongoing Bitcoin buying strategy.
MicroStrategy eyes $42 billion capital increase by 2027
In a to file with the US Securities and Exchange Commission (SEC), MicroStrategy disclosed that it purchased 1,070 Bitcoin tokens at an average price of approximately $94,000 on December 30 and 31, 2024.
This brings the company's total Bitcoin holdings to an impressive 447,470 BTC, acquired for approximately $27.97 billion at an average price of $62,503 per Bitcoin.
In particular, Saylor pointed out in a social media post on X (formerly Twitter), that the company received a Bitcoin return of 48% for the fourth quarter of 2024 and 74.3% for the entire fiscal year.
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MicroStrategy's ambitious plans extend beyond Bitcoin acquisition. On Friday, the company announced plans to raise up to $2 billion through offerings of perpetual preferred stock, which will hold seniority over its Class A common stock.
The move is part of a larger strategy to raise $42 billion in capital by 2027 through various means, including stock market sales and convertible debt offerings. With more than two thirds of it equity goals already achieved, the company is expected to move into fixed income markets soon.
The demand for MicroStrategy stock (MSTR) has increased especially among hedge funds, which use variable arbitrage strategies that include buying bonds and short selling shares.
This strategy takes advantage of MicroStrategy's stock volatility, a feature that has become a cornerstone of its business model. Signals analyst Mark Palmer said:
That volatility itself is a key element of MicroStrategy's approach as it enables the company to tap into the capital markets and in particular the convertible bond market.
MicroStrategy recently proposed to increase the number of authorized shares of Class A common stock from 330 million to 10.3 billion raised fears of a dilution of shares, leading to a significant drop in the company's stock price.
MicroStrategy's Bitcoin-heavy strategy is facing headwinds
On proxy day in December, shares fell as much as 9.6%. Adam Kobeissi, founder of Kobeissi Letter, noted the dilemma facing investors, telling:
It's a loss because on one hand you have people saying it's weak and they're selling the stock… but on the other hand you have people saying if it doesn't pass, they can't keep it ' buying Bitcoin and whether the overall investment strategy is rather broken.
A vote on the share increase is scheduled for January 21, 2025, and Saylor is very important. shareholderthe amendment is expected to pass. If approved, the share increase could lead to further volatility in MicroStrategy's stock price as the company grows faster.
Although the company has generally outperformed Bitcoin, it has faced challenges in recent months, emphasizing that factors beyond just cryptocurrency prices have an impact.
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Despite the recent volatility, Palmer maintains a “buy” rating on MicroStrategy stock. He believes the market's reaction to the proposed dividend increase is an overreaction.
“The company's strategy is to issue shares to make profitable Bitcoin purchases that could benefit shareholders,” he said.
MicroStrategy's aggressive approach to Bitcoin acquisition has seen it make large purchases exceeding $1 billion by the end of 2024, although recent weeks have seen a decline in these activities amid volatile Bitcoin prices.
Palmer reassured investors, saying, “We've seen a continuation of the company's strategy, which is not a sign of a slowdown…
At the time of writing, the market's top crypto is edging closer to the $100,000 milestone, trading at $99,340, up 2% in the last 24 hours.
Featured image from DALL-E, chart from TradingView.com
