MSTR drops 16% despite MicroStrategy completing $3B note to acquire more Bitcoin

Michael Saylor announced that MicroStrategy has successfully raised $3 billion in a variable senior note offering.

According to a company executive, the offering carries a 0% coupon rate and a 55% premium, putting the strike price at around $672 per share.

Offering a 3 billion dollar convertible note

MicroStrategy explained in the press release that the proceeds from the sale will be used to purchase additional bitcoins and for general corporate purposes. The $3 billion offering includes senior notes convertible due 2029. It also includes $400 million of additional notes, purchased pursuant to an option exercised by the original purchasers on November 20, 2024.

The notes are unsecured and do not accrue regular interest. They can also be cash, MicroStrategy Class A common stock, or a combination of both. The initial exchange rate is 1.4872 shares per $1,000 principal, reflecting a 55% premium to the average share price on November 19, 2024.

In addition, while they mature on December 1, 2029, MicroStrategy may redeem them under certain conditions until December 4, 2026. Holders may also request that the Company purchase them on June 1, 2028 or upon the occurrence of certain events.

After all deductions, the net amount of the grant amounts to $2.97 billion. This latest offering is part of the business intelligence firm's ambitious “21/21” plan to raise $42 billion over the next three years to support its Bitcoin acquisition strategy.

The plan aims to raise $21 billion in equity and $21 billion in fixed income securities, all of which will increase the company's bitcoin holdings.

Positioning of microstrategy

Microstrategy's adoption of Bitcoin was initially a hedge against macroeconomic uncertainty, but the company has since decided to build a cryptocurrency-based reserve.

In the year After switching assets in 2020, the software company has become a leader in the corporate Bitcoin treasury model. According to data from Bitcoin Treasuries, the company currently holds 331,200 coins worth more than $32.7 billion, making it the largest publicly listed BTC.

The latest Bitcoin purchases include the purchase of 51,780 BTC worth over $4.5 billion and the previous purchase of 27,200 BTC worth over $2 billion.

In the year On November 19, 2024, MicroStrategy made headlines, earning $21.8 billion in trading volume. In doing so, the company surpassed the combined size of tech companies like Apple ( AAPL ) , Amazon ( AMZN ) and Meta ( Meta ) .

However, MSTR dropped sharply after the news was announced. Down 16% daily from over $530 to $400.