Michael Saylor announced plans to raise funds to buy Bitcoin by issuing and selling $21 billion worth of MicroStrategy stock. The equity raise is part of a larger plan to raise $42 billion to buy Bitcoin over the next three years. The sale of shares on the market will dilute the company's current stock, which currently stands at $50 billion, to 42% of its market capitalization.
MicroStrategy co-founder and chairman Michael Saylor announced plans to raise $21 billion to buy more Bitcoin by offering more MSTR shares at prevailing market prices. The amount of shares issued will dilute the value of existing shares held by current shareholders.
This level of dilution typically leads to a deep discount in the stock price to maintain the same overall value, which is evidenced by the decline in the stock price.
However, MicroStrategy's stock price has not fallen significantly since the announcement. This is mainly due to shareholder group, stock price performance since 202, and Bitcoin holdings.
MicroStrategy Bitcoin Purchase Overview
MicroStrategy began purchasing Bitcoin in 2020, when adding Bitcoin to a company's balance sheet was not as accepted as it is today. The company has been issuing bonds to fund Bitcoin purchases over the past four years, and currently holds 252,220 Bitcoins (about 1% of the total Bitcoin supply) worth about $17.6 billion.
The company's most recent purchase was in September 2024, when it purchased 7,420 Bitcoins at an average price of $61,750 per BTC, raising a total of $458.2 million in senior debt issuance.
Shareholders have high expectations despite dilution concerns
MicroStrategy is in a unique position because the size of its Bitcoin holdings creates a correlation between Bitcoin's price performance and its stock price. With each large purchase of Bitcoin, MSTR moves closer to a quasi-Bitcoin spot ETF.
However, while the total cost of MicroStrategy's Bitcoin purchases was only around $9.9 billion, the current value of its holdings is 95% higher than its cost, a performance that has fueled the company's stock price rise.
MSTR was trading at around $13 in 2020 when MicroStrategy launched its Bitcoin buying strategy, and is currently trading at $244.50. The stock is up 250% this year alone, outpacing Bitcoin's 60% performance.
MicroStrategy Capital Planning and Saylor Forecasting
Michelle Saylor plans to buy $42 billion worth of Bitcoin over the next three years, powered by $21 billion in equity and bond issuance, triples her company's Bitcoin holdings depending on the average purchase price There is a possibility that it will increase.
Saylor expects Bitcoin to reach $3 million to $49 million over the next 20 years, which is why he is incorporating MicroStrategy into Bitcoin Bank.
Bitcoin is trading at $70,105 at the time of publication, after recently testing an all-time high of $73,000 reached in March 2024.
