MicroStrategy Completes $3 Billion Convertible Note Offering, Eyes More Bitcoin

On November 21, MicroStrategy’s shares plunged more than 25%, falling from a high of $536.70 to $397.28, according to Google Finance data. The drop came despite the completion of the offering, which marked a significant milestone in the company’s ongoing Bitcoin acquisition strategy.

Source: X

The newly issued 0% convertible senior notes offer a 55% premium, equating to an implied strike price of roughly $672. This means bondholders have the option to convert their notes into MicroStrategy class A common stock at a predetermined price. If not converted before maturity, the notes will be redeemed at face value.

Unlike traditional debt instruments, these notes do not pay regular interest. However, they hold “senior” status, granting bondholders priority over common stockholders in case of bankruptcy or liquidation.

If MicroStrategy allocates the full $3 billion raised from the offering to Bitcoin purchases, it could acquire approximately 30,600 BTC, based on current prices. This would further solidify its position as the public company with the largest Bitcoin holdings.

The offering builds on a previous announcement on November 18 to raise $1.75 billion through similar 0% notes, a figure later increased to $2.6 billion on November 20. These actions are part of MicroStrategy’s ambitious “21/21” plan to raise $42 billion—split evenly between equity and fixed-income securities—over the next three years to accumulate more Bitcoin.

Currently, the company holds an impressive 331,200 BTC, valued at over $32.7 billion, according to the Saylor Tracker, named after Executive Chairman Michael Saylor. This immense reserve places MicroStrategy well ahead of other public companies in Bitcoin holdings.

MicroStrategy shares experienced a significant dip following the offering, with Cirtron Research revealing a hedged short position on the stock. The firm argued that MSTR shares had become “overheated,” and their volume was “completely detached from Bitcoin fundamentals.”

Despite the volatility, MSTR remains one of the top-performing US stocks of 2024, with a year-to-date gain of 480%. On November 20, it was the second most-traded stock in the US, as investors grappled with the pros and cons of gaining Bitcoin exposure through MicroStrategy.

The firm also played a key role in driving record trading volumes in the “Bitcoin Industrial Complex” on November 21. The complex, which includes US spot Bitcoin ETFs and Bitcoin-related equities like Coinbase (COIN) and MSTR, generated an unprecedented $70 billion in trading activity.

As MicroStrategy executes its bold Bitcoin strategy, the cryptocurrency itself is closing in on a historic price milestone. Bitcoin is currently trading at $99,423—just shy of the $100,000 mark, according to Brave New Coin data.

Source: Brave New Coin Bitcoin Liquid Index