MicroStrategy, the business intelligence company turned Bitcoin giant, is in the news again. Shareholders just approved a big increase in the company’s authorized shares which will allow the company to buy even more bitcoin.
In the days following the announcement, the company’s stock fell 4.2% from highs of more than $400 to as low as $368.31, followed by a partial recovery.
The company has been a Bitcoin bull since its co-founder and executive chairman, Michael Saylor, started the initiative in 2020. With over $48 billion in bitcoin in its reserves, MicroStrategy now has over 2% of the total bitcoin supply.
At the center of it all is a shareholder vote to increase the number of Class A common shares from 330 million to 10.3 billion. Preferred shares, which get fixed dividends and sit higher than common shares in asset liquidation, went from 5 million to 1 billion.
Saylor said the vote is necessary to drive their Bitcoin strategy further and increase shareholder value.
The proposal passed with about 56% approval, thanks to Saylor’s 47% voting power. The share increase is part of MicroStrategy’s “21/21 Plan” to raise $42 billion through equity and fixed income offerings by 2027.
MicroStrategy has been on a relentless bitcoin buying spree, and even bought 11,000 BTC for $1.1 billion just before the shareholder vote.
The company is now sitting on a massive pile of 461,000 BTC, worth about $48 billion at current prices.
Since its initial $250 million investment in 2020, the company has been buying more bitcoin every chance it gets, often through equity and debt offerings. Despite market volatility, Saylor has been consistent in his view that bitcoin is “digital gold” and a hedge against inflation.
He is a believer in bitcoin’s long term value, calling it a transformational asset that’s a hedge against currency devaluation.
The share increase and continued bitcoin buying has gotten mixed reactions from investors and analysts. MicroStrategy’s stock (MSTR) fell 4.2% after the vote, closing at $369.10, but showed some signs of recovery next day.
Some are worried about the risks of putting so much of the company’s money into bitcoin, and even going into tremendous debt to buy more. But others see it as a big move that’s already paid off. Since it started its Bitcoin strategy, MicroStrategy’s stock has gone up over 3,000%.
Going forward, MicroStrategy will use the newly authorized shares to buy more bitcoin. The company has $5.42 billion in equity offerings available under its current plan but Saylor said they will evaluate market conditions and adjust if needed.
MicroStrategy’s share increase shows their commitment to Bitcoin. Yes there’s risk, but also conviction in the long term. Saylor said their strategy goes beyond buying bitcoin, it’s about shaping the future of finance.
