Strategy (MSTR) Drops 15% Amid $21B Preferred Stock Offering

Michael Saylor, co-founder and chairman of Strategy, has unveiled an ambitious plan to raise up to $21 billion through the issuance of preferred stock. This move is part of a broader strategy to acquire more Bitcoin (BTC) and bolster the company's holdings in the cryptocurrency market. The new offering will consist of 8% series A perpetual-strike preferred shares, which are convertible into class A common stock. The company plans to sell these shares through an “at the market offering” program, allowing for flexibility in timing and pricing. This approach builds on a previous successful effort in January, when Strategy raised $563 million by issuing preferred shares priced at $80 each, which were offered at a discount to their market value.

Preferred stocks are unique hybrid securities that combine features of both equity and debt, offering investors a fixed dividend while providing a claim on company assets. The favorable terms of the January deal reportedly attracted significant investor interest, contributing to a strong performance of the newly issued shares. Since late October, Strategy has been actively acquiring Bitcoin, and the latest capital raise is part of a broader strategy to secure $42 billion over the next few years through various securities offerings. This includes a focus on selling fixed-income securities while managing common stock sales to fund additional BTC purchases. Currently, the firm holds approximately 499,096 Bitcoin, valued at around $42 billion.

Despite this purchase plan, Strategy reported that it did not purchase any Bitcoin between March 3 and March 9, according to a filing with the US Securities and Exchange Commission. This pause comes amid a fluctuating cryptocurrency market. The preferred stock market has seen varied performance; while the shares climbed 18% from their initial pricing, they faced a decline of over 6% in a recent trading session as the supply increased. Despite this fluctuation, the preferred shares have outperformed common stock and Bitcoin over the same period, suggesting a robust demand from investors.

As seen in the daily chart, shares of Strategy (MSTR) experienced a drop of around 15% to $238 on Monday, reflecting broader market trends that have seen the company’s stock down approximately 10% this year. In contrast, shares have surged over 2,200% since Saylor began investing in Bitcoin as an inflation hedge in 2020, while Bitcoin itself has risen over 600%.