YEREVAN (CoinChapter.com) — On Oct. 30, 2024, MicroStrategy, led by Michael Saylor, announced its 21/21 plan to raise $42 billion over the next three years for Bitcoin acquisition. This strategic capital plan involves raising $21 billion through equity offerings and $21 billion in fixed-income securities to significantly increase its Bitcoin reserves.
MicroStrategy’s $42 Billion Bitcoin Investment Plan. Source: Michael Saylor on X
MicroStrategy CEO Phong Le detailed the company’s focus, stating,
“Our goal is to use additional capital to buy more Bitcoin as a treasury reserve asset.”
As the largest corporate holder of Bitcoin, MicroStrategy already holds 252,220 BTC.
MicroStrategy Bitcoin Holdings Summary Q3 2024. Source: MicroStrategy Report MicroStrategy Financial Strategy and BTC Yield Targets
MicroStrategy aims to boost its BTC yield to an annual range of 6% to 10% between 2025 and 2027. The company’s current BTC yield for the year stands at 17.8%, reflecting substantial gains from its Bitcoin holdings. In a recent statement, Phong Le described this capital plan as foundational to achieving higher returns for shareholders, with a well-defined approach to leverage.
To support the 21/21 plan, MicroStrategy completed a $1.01 billion convertible notes offering in September 2024, alongside a 10-for-1 stock split in August. CFO Andrew Kang highlighted these steps as vital components for strengthening MicroStrategy’s position. He commented,
“Our proven track record of using intelligent leverage serves as the foundation to execute on our strategic three-year plan.”
Market Response and Analysts’ Reactions
The news of MicroStrategy’s capital plan generated substantial interest in the crypto community. BitcoinMiningStockGuy remarked on the significance of the $21 billion equity raise, which he noted was “equivalent to the total market cap of all public miners combined.”
$21 Billion ATM Market Cap Comparison. Source: BitcoinMiningStockGuy
Quant volatility researcher Ryan McGinnis characterized the plan as reaching “escape velocity,” noting its potential to outpace other public companies.
MSTR’s “Escape Velocity” in BTC Holdings. Source: Ryan- @ryQuant
In addition, Baris Serifsoy further emphasized the scale of this initiative, estimating that a $42 billion Bitcoin purchase could add 280,000 BTC to MicroStrategy’s holdings. This would potentially give the company a 2.5% share of all Bitcoin in circulation. He observed,
“They could either become the world’s largest company or face financial strain due to high leverage.”
MicroStrategy’s $42B Bitcoin Vision – Source: Baris Serifsoy – @BSerifsoy MicroStrategy Stock Performance and Projected Volatility
MicroStrategy’s stock, trading at $247.31, dropped approximately 5.9% after its Q3 earnings fell short of estimates. The company reported $116.1 million in revenue, a 10.3% decrease year-over-year, and an overall gross profit of $81.7 million. With this strong correlation to Bitcoin prices, some analysts predict further volatility in MicroStrategy’s stock, especially around key events like the U.S. presidential election.
Timothy Peterson, a market economist, highlighted the potential risks tied to Bitcoin’s value, stating that a Bitcoin price drop post-election could lead to a sharper decline in MicroStrategy’s stock. As of Sep. 30, 2024, the carrying value of MicroStrategy’s digital assets stood at $6.85 billion, reflecting an average Bitcoin acquisition cost of $39,266.
Operational and Financial Data: MicroStrategy’s Q3 Performance
Notably, in Q3 2024, MicroStrategy’s Bitcoin holdings increased by 11%, while its year-to-date BTC yield reached 17.8%. Despite a $412.1 million impairment loss on digital assets, the company remains focused on its Bitcoin strategy. This quarter’s operating expenses rose by 301.6% year-over-year, reaching $514.3 million, mainly due to Bitcoin-related impairments. The company also reported a $432.6 million loss from operations.
Above all, the next three years will likely see substantial changes in its asset base as the company navigates both financial markets and the cryptocurrency landscape.
At the time of writing, Bitcoin stands at $72,408.60, reflecting a 0.38% increase over the last 24 hours.
Bitcoin Price at $72,408. Source: CoinMarketCap
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