Microstrategy is to have its first even bitcoin stock offering, aiming to raise $1 billion from equity after successfully closing a $500 million bond offering.
“We intend to use the net proceeds from the sale of any class A common stock offered under this prospectus for general corporate purposes, including the acquisition of bitcoin, unless otherwise indicated in the applicable prospectus supplement,” the company said in a filing.
Microstrategy currently has a market cap of just $6 billion on gross profits of $400 million a year, $80 million of it being net income.
They have 91,326 bitcoin in possession prior to this new $1.5 billion stock and bond offering, worth about $3.6 billion at the current price.
Once the stock and bond offering is converted to bitcoin, it will amount to $5 billion at the current price, or 90% of their market cap.
Making the stock perhaps undervalued as it is an almost fully collateralized profit generating business with the company stating:
“MicroStrategy pursues two corporate strategies in the operation of its business. One strategy is to acquire and hold bitcoin and the other strategy is to grow our enterprise analytics software business.”
Many of the bitcoin purchased however are through debt offerings that carry circa 6% interest a year.
In addition this $1 billion equity offering may put some pressure on MSTR’s price as it is about 17% of their market cap, but on the other hand it should add some significant demand for bitcoin.
Making this a new frontier as Microstrategy is pioneering a bitcoin treasury reserve asset class with fairly huge sums.