MicroStrategy announced today it will raise $42 billion to buy more Bitcoin. The company targets raising $21 billion through equity offerings and $21 billion through fixed-income securities over the next 3 years.
The company will continue its buying spree after acquiring 252,220 BTC. MicroStrategy is stacking BTC in a big way. Based on how the stock is trading, it seems to be a good strategy.
“Our focus remains to increase value generated to our shareholders by leveraging the digital transformation of capital. Today, we are announcing a strategic goal of raising $42 billion of capital over the next 3 years, comprised of $21 billion of equity and $21 billion of fixed income securities, which we refer to as our “21/21 Plan,” said Phong Le, MicroStrategy CEO in a statement post-third-quarter earnings report.
Le added that MicroStrategy aims to boost its BTC Yield, a key performance indicator that measures the profitability of its Bitcoin holdings. The company’s year-to-date BTC Yield for 2024 stands at 17.8%. The company has set a long-term target of achieving a 6% to 10% annual BTC Yield between 2025 and 2027.
Buying More BTC
As of September 30, 2024, MicroStrategy held around 252,220 Bitcoin, valued at around $16 billion at current prices. With a total of $9.904 billion spent acquiring Bitcoin, MicroStrategy had approximately $6.103 billion in unrealized gains on its Bitcoin holdings.
MicroStrategy, under the leadership of Michael Saylor, is ambitiously positioning itself to become a leading Bitcoin corporation. Saylor recently revealed plans to transform the company into a Bitcoin-focused financial institution that could reach $1 trillion in valuation as long as Bitcoin’s prices soar.
Saylor’s banking vision is to offer a suite of financial products backed by Bitcoin, including stocks, bonds, and other investment instruments, instead of engaging in lending like traditional banks.
MicroStrategy plans to borrow funds through various capital market instruments, using these funds to invest in Bitcoin. Saylor anticipates that this approach will result in an average annual return of about 29%.
Big Price Calls
Saylor predicts that Bitcoin could reach values as high as $13 million per coin by 2045. He believes this long-term perspective will onboard more companies and institutional investors to integrate Bitcoin into their balance sheets.
The executive chairman of MicroStrategy also made headlines after he publicly offered to advise Microsoft on incorporating Bitcoin into its financial strategy. Saylor said that Microsoft CEO Satya Nadella could “make the next trillion dollars for $MSFT shareholders” with his help.
The proposal came ahead of Microsoft’s shareholder meeting, which reportedly would vote on Bitcoin investment. However, Microsoft’s board recommended voting against the proposal due to their previous evaluations of various investment opportunities, including Bitcoin.
The board suggested a focus on stable investments like U.S. government securities and corporate bonds. Bitcoin, indeed, is known for its price fluctuations, which might have discouraged the team from recommending it.
Showing Gains
Elsewhere, MicroStrategy’s Bitcoin strategy appears to have paid off. Apart from the unrealized gains on the investments, MicroStrategy ($MSTR) has seen its stock price rally since it started pursuing the accumulation plan.
According to Yahoo Finance, $MSTR has surged about 291% year-to-date. It hit a high of $268 last week. Despite a recent correction following its Q3 earnings report, the stock remains at its 25-year peak of $240.
MicroStrategy’s stock performance has also outperformed Microsoft’s ($MSFT). Microsoft’s shares have reported gains of around 15% so far this year.
Unlike MicroStrategy and Tesla, the two leading Bitcoin corporate holders who reported making no Bitcoin sale in the previous quarter, Reddit’s Q3 report showed that the company had sold part of its Bitcoin and Ethereum holdings.
The company explained that a decline in advertising revenue due to global economic concerns, rising interest rates, and geopolitical tensions led to the decision. Given the economic outlook, things may fall further.
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