MicroStrategy (Nasdaq: MSTR) has unveiled its third debt offering of 2024, aiming to raise $700 million through the issuance of convertible senior notes due in 2028. The company plans to use the proceeds to refinance $500 million in existing debt and further expand its Bitcoin holdings, with any remaining funds allocated for general corporate purposes.
Debt Offering Details
The new convertible senior notes will be unsecured and will begin accruing interest in March 2025. This offering is available exclusively to qualified institutional buyers. MicroStrategy’s strategy of leveraging debt to acquire Bitcoin has been consistent throughout 2024, with this being the third such offering of the year. Earlier, the company raised $700 million in March and $500 million in June through similar debt offerings, with notes maturing in 2032.
Refinancing, a common practice among companies, allows them to replace existing debt with new debt, typically to secure more favorable terms. MicroStrategy’s current move will help pay off $500 million in senior secured notes, and the additional funds raised will be used to purchase more Bitcoin, continuing the company’s ongoing strategy.
Bitcoin Acquisition Strategy
MicroStrategy remains one of the largest public holders of Bitcoin globally, with 244,800 BTC—valued at approximately $14 billion as of September 13, 2024—on its balance sheet. This aggressive acquisition strategy has been a cornerstone of the company’s financial moves, with CEO Michael Saylor being a vocal proponent of Bitcoin as a long-term asset.
However, the volatility of Bitcoin has significantly impacted the company’s financial performance. In the second quarter of 2024, MicroStrategy reported a net loss of $102.6 million, or $5.74 per share. This was a sharp contrast to the $22.2 million net income it recorded in the same period last year. The loss was largely due to a $180.1 million digital asset impairment, stemming from the fluctuations in Bitcoin’s value.
Stock Performance and Investor Sentiment
Despite concerns about its exposure to Bitcoin, MicroStrategy’s stock has performed impressively over the past year. As of September 16, the company’s stock price surged nearly 295% over the past 12 months, reaching $134 per share. This year alone, the stock has gained 96%, highlighting investor confidence in the company’s Bitcoin-centric strategy.
While analysts remain cautious about the risks associated with MicroStrategy’s significant Bitcoin holdings, its stock performance suggests that the company’s strategy has, so far, paid off.
