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Market Musings

MicroStrategy is Selling $1B of Stock as Part of Quest to Buy More Bitcoin

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Published on:
June 15, 2021

The plans were unveiled hours after it closed the sale of senior secured notes worth $500 million.

MicroStrategy is Selling $1B of Stock as Part of Quest to Buy More Bitcoin

Table of Contents

MicroStrategy’s determined push to buy more Bitcoin is showing no signs of slowing down.

 

Hours after closing the sale of senior secured notes worth $500 million so it can increase its exposure to cryptocurrency, the business intelligence firm filed with the U.S. Securities and Exchange Commission — revealing it plans to sell $1 billion in common shares.

 

Investors can sometimes take a dim view of such practices because it effectively waters down the value of their stock. That said, MicroStrategy’s stock did deliver an impressive surge of 16% on Monday, meaning it closed the session at $598.

 

Concerns have been raised over MicroStrategy’s tactics, amid fears that the company could be left insolvent if the price of Bitcoin falls below a key level. Right now, the business is sitting on paper profits worth $1.4 billion.

 

Words of Wisdom

The senior secured notes sold by MicroStrategy will be due in 2028 and will pay an annual interest rate of 6.125%.

 

In a slew of bullish tweets on Tuesday morning, the company’s CEO Michael Saylor asked his followers: “Do you expect the price of #Bitcoin to appreciate more than 6.125% annually over the next seven years?”

 

More than 10,000 votes had been cast at the time of writing — with 88.9% saying that they expect Bitcoin to exceed this interest rate.

 

Saylor went on to add:

“It's better to have a #Bitcoin and not need it than need a Bitcoin and not have it.”

Author(s)

Connor Sephton

I cover the crazy world of crypto.

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