Key Points
- Strategy, formerly MicroStrategy, plans to raise $21 billion to fund more Bitcoin purchases.
- The company will raise funds through its class A strike preferred stock and through an at-the-market sale.
Strategy, previously known as MicroStrategy, is planning to raise additional capital to fund its Bitcoin purchases. This is despite the recent market downslide and macroeconomic uncertainty.
Fundraising Plans
The firm has plans to raise $21 billion through its class A strike preferred stock. This move is aimed at bolstering its investment portfolio. The funds raised from the sale will be used to fund general corporate operations, which could include more purchases of Bitcoin (BTC).
The sale of STRK shares will add to Strategy’s existing ATM equity program for the “21/21” roadmap. This is a plan to raise and invest $42 billion in BTC, a strategy championed by executive chairman Michael Saylor.
At present, Saylor’s company owns approximately 499,096 BTC, valued at over $41 billion. Strategy has spent about $33.1 billion acquiring this massive BTC cache at an average price of $66,357. This acquisition was mostly funded by capital raised from equity sales.
STRK Shares and Future Plans
STRK, a perpetual preferred stock, adds a new layer of flexibility for Strategy as it continues to buy BTC through share sales.
Perpetual preferred stocks aren’t bound to a maturity date or a fixed redemption period like bonds. Instead, vehicles like STRK pay a predetermined dividend in perpetuity, 8% in Strategy’s case, while the issuer remains in business. STRK investors can also swap their holdings for class A common shares, although this process involves specific requirements and conditions.
Moreover, Strategy can exercise a buyback option for the total unbought allocation if STRK’s value declines 25% below its initial value at issuance.
According to TradingView data, STRK was down 2.1% at last week’s close. Strategy did not see new patronage for its class A common stock between March 3 and March 7. This suggests that the firm will likely not disclose a new BTC acquisition this week.
