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MicroStrategy plans to sell $400m bonds to buy more bitcoin

By Andrei Chirileasa

15:18, 7 June 2021

Microstrategy headquarters

US business intelligence firm MicroStrategy (Nasdaq: MSTR) will sell $400m worth of secured notes due 2028 and use the money to increase its bitcoin holdings, the company announced on Monday 7 June.

MicroStrategy, which currently has a market capitalisation of $4.6bn, saw its shares decline by 2.4% after the announcement on Monday. The price of bitcoin didn’t move after the news, staying close to the $36,000 level at which it started the day.

MicroStrategy ups its existing bitcoin bet

MicroStrategy was the first US listed company that placed a significant bet on the cryptocurrency market in response to the inflationary pressure. The company now holds approximately 92,079 bitcoins, worth over $3.31bn at current prices.

The average acquisition price was close to $24,000, according to MicroStrategy’s previous reports, which means that the company still has a profit of about 50% on its investment, although bitcoin’s price is now some 44% lower than the all-time high reached in mid-April.

“We will continue to pursue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, issue debt or equity securities in capital-raising transactions with the objective of using the proceeds to purchase additional bitcoin,” MicroStrategy CEO Michael J. Saylor said in February, when the company bought 19,452 bitcoins at a price of $52,765 each.

ETH/USD

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Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
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Spread 0.01168

If the bond sale goes as planned, the company could buy approximately 11,000 bitcoin at current prices.

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MSTR stock price dragged down by crypto meltdown

MicroStrategy’s stock price has tumbled by 24% in the last month as the price of bitcoin fell by 38% in the same period. The current level of $471 is 64% lower than the 20-year high of $1,315 reached in early February, amid the crypto frenzy.

However, MSTR shares are still up 11% since the beginning of this year, while the price of bitcoin is up about 24% year-to-date.

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Read more: bn asset manager calls Bitcoin its “primary treasury reserve asset”

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