MicroStrategy is back in the news, folks! They just bought a whopping 15,400 Bitcoin (BTC) for around $1.5 billion, bringing their total Bitcoin stash to 402,100 BTC. That’s about $38.66 billion at today’s prices. Yeah, you read that right.
"MicroStrategy has acquired 15,400 BTC for ~$1.5 billion at ~$95,976 per Bitcoin, achieving a BTC yield of 38.7% QTD and 63.3% YTD. As of December 2, 2024, we hold 402,100 BTC acquired for ~$23.4 billion at ~$58,263 per Bitcoin." — Michael Saylor (@saylor), December 2, 2024
How They Funded the Purchase
How did they get the cash for this latest acquisition? Well, they had a little help from the SEC. According to their filing, they sold up to $21 billion in common stock, part of which they used to buy the Bitcoin. Between November 25 and December 1, they sold about $1.48 billion worth of shares. This follows a previous sale of over 3.7 million MicroStrategy shares.
And just so you know, they are not done selling shares. They still have $11.3 billion worth of shares available for sale. Over the next three years, they hope to raise $42 billion from selling stocks and other stuff, a good chunk of which is going to Bitcoin.
The Commitment to Bitcoin
Now, this isn't the first time MicroStrategy has gone on a Bitcoin buying spree. This marks the company's fourth week in a row of buying Bitcoin. Last week, they bought 55,500 BTC for about $5.4 billion at an average price of $97,862.
The company has now spent more than $23.4 billion on Bitcoin, with an average price of $58,263 per coin. Their strategy seems to be to keep accumulating Bitcoin over the next few years, no matter what.
And let's not forget the competition. They're leaving companies like Marathon Digital in the dust. Marathon, which is second in line for corporate Bitcoin holdings, has only about 33,875 BTC. They’re raising $700 million for Bitcoin purchases, but they’re still way behind MicroStrategy.
Financial Stability vs. Volatility
Now, you might be wondering how this affects MicroStrategy's financial health and stockholder value. Despite the ups and downs, the company’s financial management has kept it stable. They've raised a hefty amount of money through stock and bond offerings to fund their Bitcoin buys.
Their aggressive Bitcoin buying has led to a massive surge in their stock price, which is up over 500% this year. But here’s the kicker: their stock price is also becoming more linked to Bitcoin's price swings. So, yeah, there's a double-edged sword here.
MicroStrategy has raised a ton of cash through convertible debt and equity. This helps them stick to their plan to raise $42 billion over the next three years for Bitcoin purchases. But it does come with some risks.
Analysts at Bernstein are feeling optimistic, upping their price target for MicroStrategy shares to $600 by the end of 2025. But let’s see how that plays out.
The Risks Are Real
MicroStrategy is now sitting on nearly 2% of all Bitcoin that will ever exist. This strategy is about enhancing value for enterprises and reducing risk for shareholders. But let’s face it, it also puts them in the line of fire from Bitcoin price volatility.
Despite the ups and downs, MicroStrategy's stock has skyrocketed this year. Saylor is calling for other companies, even Microsoft, to follow suit. If they do, it could have a broader impact on the market and support Bitcoin prices.
In the end, MicroStrategy's aggressive Bitcoin buying and funding strategies mean issuing new shares, which can dilute existing stockholders. And we know the stock price is highly correlated with Bitcoin, which is a wild ride. But they've kept their financial ship steady, so far, at least.
Summary
MicroStrategy's Bitcoin acquisition has clearly boosted its financial stability and stockholder value, but at a cost. The stock's performance is increasingly tied to Bitcoin's volatility, which could be a concern down the line. Their strategy has made them a major player in corporate Bitcoin adoption, but with that comes the risks of the crypto market.
