Strategy, the largest publicly traded corporate holder of Bitcoin, announced plans to raise nearly $1 billion through a new stock issuance aimed at increasing its Bitcoin holdings.
The offering will consist of 11,764,700 shares of Series A Perpetual Stride Preferred Stock, priced at $85 per share.
Major Capital Raise
According to Strategy’s June 6 announcement, the firm expects to net approximately $979.7 million after accounting for underwriting discounts and offering expenses.
The funds will be directed toward general corporate purposes, including new Bitcoin acquisitions and working capital needs.
This offering marks a significant jump from Strategy’s previously disclosed goal of raising $250 million.
A Shift in Financing Tactics
Historically, Strategy has relied on issuing common stock and convertible debt to finance its Bitcoin purchases.
This move introduces a new approach with preferred shares that will provide non-cumulative dividends of 10% to professional and institutional investors.
If used entirely for Bitcoin purchases, the $1 billion could secure around 9,633 BTC at the current market price of $103,800.
This would be a substantial increase from its most recent buy of 705 BTC for $75.1 million announced earlier in the week.
High Premium and Investor Risks
Strategy’s stock is trading at a significant premium to its underlying Bitcoin and software business value.
A May 22 research report by asset manager VanEck estimated a 112% premium.
“Every time MicroStrategy issues new shares to retail investors — shares backed by Bitcoin worth only a fraction of the stock price — the company pockets the difference and frames it as Bitcoin yield,” said Markus Thielen, CEO of 10x Research.
Concerns of Overvaluation
While Strategy’s premium is high, it’s still lower than that of Japanese investment firm Metaplanet.
That company’s shares traded at a staggering $596,154 premium over spot Bitcoin on May 27.
This raises concerns for less-informed investors who may be overpaying for Bitcoin exposure without receiving proportional upside, according to 10x Research.