Strategy to Sell $21 Billion in Preferred Stock for Bitcoin Purchases
Strategy, formerly known as MicroStrategy, may soon sell $21 billion in preferred stock to buy more Bitcoin, according to a Monday filing. The firm said in a Securities and Exchange Commission filing that it has now entered into a sales agreement with a dozen financial institutions that will be able to issue its “STRK” offering.
The company held $40 billion worth of Bitcoin when it first introduced STRK in January. At the time, the firm said it was targeting a $2 billion capital raise using preferred stock, which features an 8% cumulative dividend that’s payable in either cash or Class A shares.
Monday’s filing from Strategy notes that the firm can make no assurances as to when the sale of its preferred stock will take place, or if it will be able to sell $21 billion worth of preferred shares. Strategy meanwhile announced no new Bitcoin purchases for a second week in a row.
That will come as no surprise to Myriad users, who correctly predicted that the company wouldn’t buy any Bitcoin before March 10. An hour before the prediction market closed, 83% of users said there would be no new BTC buy from Strategy. (Disclosure: Myriad is a prediction market and engagement platform developed by Dastan, parent company of an editorially independent Decrypt.)
While the firm’s Bitcoin-buying spree heated up last year, the firm last bought Bitcoin on Feb. 24., when it scooped up $1.9 billion worth of the asset for an average price of $97,500, per Saylor Tracker.
Amid President Donald Trump’s renewed trade war, Bitcoin’s price has dipped to a five-month low. Around noon Eastern, the cryptocurrency’s price had fallen 5.3% over the past day to $79,000, according to crypto data provider CoinGecko.
On Monday, Strategy’s shares were hit relatively harder than Bitcoin’s price. The firm’s share price has dropped 12% to $251 in midday trading, per Yahoo Finance.
Strategy’s $21 billion announcement on Monday dovetailed with its Bitcoin-buying plans unveiled last year. In October, the company said it plans to raise $42 billion through equity and fixed income sales over the next three years to purchase more Bitcoin than it could otherwise.
As crypto prices have been battered over the past few months, Strategy’s market capitalization has fallen relative to the value of its Bitcoin holdings. The company was valued at 3.4x its Bitcoin holdings in November, but that ratio had since fallen to 1.6x, per MSTR Tracker.
Last week, industry heavyweights gathered in Washington, D.C., during a first-ever White House crypto summit. Among those present was Strategy co-founder and Executive Chairman Michael Saylor, who sat not far from Trump.
Edited by Stacy Elliott.