MicroStrategy, a self-proclaimed Bitcoin development company, announced that it will issue up to $2 billion of perpetual preferred stock to further strengthen its balance sheet and acquire more Bitcoin.
MicroStrategy launches “21/21 Plan”
MicroStrategy launched the “21/21 Plan” in October 2024, aiming to raise $42 billion within three years, including $21 billion of equity capital and $21 billion of fixed-income capital. To accelerate the realization of this goal, MicroStrategy announced the convening of a special shareholders’ meeting and proposed the following for the issuance of new shares:
Increase the authorized Class A common stock from 330 million shares to 10.33 billion shares to support future fundraising.
Increase the authorized preferred stock from 5 million shares to 1.005 billion shares to expand financing options.
MicroStrategy leads the issuance of “perpetual preferred stock”
Yesterday, MicroStrategy announced in advance that it will issue up to $2 billion of perpetual preferred stock, which refers to preferred stock with no maturity date. Preferred stock usually has no voting rights, and the dividends are typically fixed, with priority in liquidation.
MicroStrategy stated that its objective is to raise funds through one or more public offerings of perpetual preferred stock, with the following features:
Convertible to Class A common stock.
Payment of cash dividends.
Allowance for share redemption.
The final terms and issuance price of perpetual preferred stock have yet to be determined. The purpose of this issuance is to enable MicroStrategy to continue strengthening its balance sheet and acquiring more Bitcoin. The issuance is expected to take place in the first quarter of 2025, but MicroStrategy also reserves the right not to execute the issuance.
Why choose “perpetual preferred stock”?
The characteristic of perpetual preferred stock is that it usually has no voting rights and does not have a significant impact on the governance of the company. After all, according to the temporary shareholders’ meeting plan, MicroStrategy’s share capital will increase from the current 500 million shares to 11.5 billion shares, a staggering increase of 2,200%.
However, for investors, buying preferred stock offers relatively fixed dividend distributions and, in the event of company liquidation, preferred stockholders will receive asset distributions ahead of common stockholders. For companies like MicroStrategy that do not pay dividends, and recent issuances of convertible bonds without interest, perpetual preferred stock seems to be a good choice for investors seeking stable income.
Risk Warning
Cryptocurrency investments are highly risky, and prices may fluctuate dramatically, resulting in a loss of the entire principal. Please carefully assess the risks.