MicroStrategy, a software company known mostly for its extremely funny name, recently announced that it plans to raise $42 billion through a combination of selling stock and bonds (about $750 million worth in the next six months) to buy more bitcoin. $42 billion is nearly MicroStrategy’s entire market value of about $45 billion. MicroStrategy is the public company of Michael Saylor, the chairman who recently announced he was going to turn the company into ‘an aristocracy’, and has been on a bitcoin-buying spree for the past year, accumulating billions in bitcoin. Its stock is near an all-time high since the dot-com bubble, despite the fact that MicroStrategy’s software business is declining. It lost $433 million on revenues of $116 million in the third quarter, and has been losing revenue year on year.
The plan to lever up into bitcoin with share sales and debt could, ultimately, be MicroStrategy’s saviour, as the company increasingly suffers from failing business metrics. On 13 October, MicroStrategy filed with the SEC for a $21 billion at-the-market offering that would allow it to sell stock into the market and create a floor in its capital structure with the proceeds. As bitcoin prices traded at or near all-time peaks and MicroStrategy’s initial $250 million bet way back in August 2020 became increasingly profitable, its bitcoin strategy was paying off during a period of steep price appreciation. As of the end of September, its bitcoin holdings were worth about $16 billion, roughly a third of its market cap.
Source: Markets Insider
