MicroStrategy Doubles Down on Bitcoin with $563M Raise

MicroStrategy, a publicly-traded U.S. software company, has announced plans to expand its Bitcoin holdings with a fresh funding of $563 million. The company will raise these funds through the sale of 7.3 million shares of its 8.00% Series A perpetual preferred stock, which is expected to settle on February 5. This significant investment will provide MicroStrategy with a substantial war chest to fuel its aggressive Bitcoin acquisition strategy.

In a recent release, MicroStrategy's CEO, Michael Saylor, confidently predicted a "bear case" of $3 million per Bitcoin and a "bull case" of $49 million, assuming annual growth rates of 21% and 37% respectively. Despite the optimistic outlook, Saylor's price target is far lower than Bitcoin's historical 60% annual growth rate over the past decade. However, MicroStrategy's decision to use the proceeds to buy more Bitcoin is a clear indication of its confidence in the asset's long-term potential and staggering growth in value.

MicroStrategy's perpetual preferred stock will have a liquidation preference of $100 per share and accumulate cumulative dividends at a fixed rate of 8.00% per annum. Holders of the preferred stock will have the right to convert their shares into MicroStrategy's class A common stock at an initial conversion rate of 0.1000 shares per share. The offering is managed by a syndicate of banks, including Barclays, Moelis & Company LLC, BTIG, TD Cowen, and Keefe, Bruyette & Woods, none of which currently hold Bitcoin as a balance sheet asset.