MicroStrategy Raises $3B Through Convertible Notes to Expand Bitcoin Holdings

MicroStrategy Secures $3 Billion for Bitcoin Push Amid Plans to Raise $42 Billion, Shares Drop 25% After Short Position.

Posted by: Jimmy Aki

Updated Nov 25th, 2024 2 minutes read

Key Takeaways:

MicroStrategy has raised $3 billion through convertible senior notes to buy Bitcoin.
The offering reflects MicroStrategy's plan to raise $42 billion over three years for Bitcoin accumulation.
MicroStrategy's shares dropped over 25%, from $536.7 to $397.28, following Citron Research's short position.

On November 21, MicroStrategy finalized a $3 billion offering of 0% convertible senior notes due in December 2029 to fund additional Bitcoin purchases. The offering is part of MicroStrategy’s ambitious plan to raise $42 billion over three years to accumulate more Bitcoin.

The rapid adjustments reflect MicroStrategy’s strong commitment to expanding its Bitcoin holdings and its belief in the cryptocurrency’s potential to drive long-term value.

MicroStrategy Convertible Senior Notes Came at 55% Premium

Michael Saylor, the founder and CEO of MicroStrategy, announced that the company’s recent offering of convertible senior notes came at a 55% premium, with an implied strike price of around $672.

$MSTR has completed a $3 billion offering of convertible notes at 0% coupon and 55% premium, with an implied strike price of ~$672. https://t.co/GzO0br0Xfh
— Michael Saylor⚡️ (@saylor) November 21, 2024

MicroStrategy issues 0% convertible senior notes as debt instruments, offering zero interest with the option for investors to convert the notes into company stock at a future date. The predetermined price at which investors can buy or sell the stock after conversion is known as the “strike price,” set at the time of the offering.

These senior notes are offered to qualified institutional buyers under Rule 144A of the Securities Act.

The convertible senior notes will be due for repayment on December 1, 2029, unless MicroStrategy repurchases, redeems, or the investors convert the notes into stock before that date. If any of these actions occur, the notes would no longer be outstanding, and the maturity date would not apply.

Notably, the $3 billion offering comes on the heels of MicroStrategy’s November 18 announcement to raise $1.75 billion at 0% interest – a figure that was later increased to $2.6 billion on November 20.

These efforts are part of the company’s broader strategy to raise $42 billion over the next three years, aimed at expanding its Bitcoin holdings under the “21/21” plan, which includes $21 billion in equity and $21 billion in fixed-income securities.

MicroStrategy announces $42 billion capital plan including $21 billion ATM equity offering and a target of raising $21 billion in fixed-income securities. Join us at 5pm ET as we discuss our quarterly results and #Bitcoin Treasury Company plans. $MSTR https://t.co/eXYELbN1Dm
— Michael Saylor⚡️ (@saylor) October 30, 2024

If the entire $3 billion is allocated to Bitcoin purchases, MicroStrategy could acquire an additional 30,600 BTC based on current market values. This follows the company’s recent acquisition of 51,780 BTC for approximately $4.6 billion, further cementing its role as a major player in the cryptocurrency market.

MSTR Shares Dips Over 25% Amid Citron Research Disclosure

Yesterday, Citron Research explained it had taken a short position on MSTR shares.

The research firm expressed concerns that the stock is “overheated” and its trading volume has become disconnected from Bitcoin’s core market fundamentals.

How did this one age? Nearly 4 years ago to the date, Citron was the first to tell readers that MicroStrategy was the ultimate way to invest in Bitcoin, setting a $700 target.
Fast forward to today: $MSTR has skyrocketed to over $5,000 (adjusted). Kudos to Michael Saylor for…
— Citron Research (@CitronResearch) November 21, 2024

This shift signals Citron’s belief that MSTR is overvalued and due for a correction. Following the disclosure, MSTR shares tumbled over 25% from a high of $536.70 to $397.28 by the market close on November 21. The sudden drop raised questions about investor sentiment and whether Citron’s bearish view reflects broader market concerns.

Despite the decline, MSTR continues to dominate market discussions.

Earlier this week, MicroStrategy emerged as the most traded stock in the U.S., overtaking tech giants like Tesla and Nvidia. The company contributed a record $70 billion in trading volume across Bitcoin-related assets, including U.S. spot Bitcoin ETFs and stocks like Coinbase.

BITSANITY: Let's try $70b in volume today for The Bitcoin Industrial Complex, crushing yesterday's record.. About $50b of that was from $MSTR and its 2x friends (all of which dropped records). $IBIT no slouch tho at $5b, its second biggest day ever. $MSTZ w its first $1b day. pic.twitter.com/xsRYZm1PSx
— Eric Balchunas (@EricBalchunas) November 21, 2024

This high level of activity suggests that MicroStrategy continues to attract major attention.

Jimmy Aki

Drawing from his background in economics, Jimmy has monitored blockchain development for years, firmly believing in its power to democratise finance. Beyond offering commentary on the latest crypto developments, he also spends his time analysing open-source codes of promising projects on GitHub. Jimmy holds Bitcoin and Ethereum.