MicroStrategy is about to hold a special shareholder meeting to expand its stock issuance plan and buy more bitcoins. This software development company, which currently holds the most bitcoins of any corporation, proposes to increase its Class A common stock and preferred stock shares to better execute its bitcoin strategy.
According to the proxy statement submitted by MicroStrategy to the U.S. Securities and Exchange Commission (SEC) on December 23, the company is seeking authorization to increase the issuance numbers of both Class A common stock and preferred stock, allowing for future stock issuance if needed.
The first amendment seeks to increase the number of Class A common shares authorized for issuance from 330 million to 10.33 billion, while the purpose of the second amendment is to increase the number of authorized preferred shares from 5 million to 1.005 billion.
Behind these two proposals is MicroStrategy's "21/21 plan." This plan, announced in October, describes the company's intention to purchase an additional $42 billion worth of bitcoins over the next three years. The plan includes raising $21 billion through stock issuance and an additional $21 billion through the issuance of fixed-income securities.
Additionally, the proxy statement details the company's other proposals, including a new equity incentive plan that will automatically grant equity awards to new directors.
According to the documents submitted by MicroStrategy: "Proposals 1 and 2 of this special meeting request an increase in the authorized shares of the company's capital stock to support the further implementation of our 21/21 plan and broader future capital market activities, as well as other corporate purposes."
MicroStrategy has been regularly buying bitcoins since 2020, but has intensified purchases since announcing the above plan in October. In December alone, the company purchased 42,162 bitcoins, with a market value of over $4 billion at current prices.
At the end of October, MicroStrategy announced that the company's bitcoin yield was 17.8%, and the company's plan is to achieve an annual yield of 6% to 10% between 2025 and 2027. After that, the company will raise $13 billion through stock issuance and up to $3 billion through the issuance of convertible bonds.
The company's documents state: "The pace of execution of our 21/21 plan is significantly faster than originally expected."
As of December 22, MicroStrategy and its subsidiaries hold approximately 444,262 bitcoins, worth about $43.53 billion. The total amount spent on these bitcoins was $27.7 billion, representing an average purchase price of $62,257 per bitcoin.
Although news of MicroStrategy buying bitcoins typically drives the company's stock price up, the stock fell 8.78% on Monday, rebounded 7.8% to $358.18 per share on Tuesday, but still fell 11% over the past month. Despite this, the stock has soared over 400% in the past year, largely due to its bitcoin strategy.
The specific date for the special shareholder meeting to vote on this proposal has not yet been announced, but it is expected to be held in 2025, while the company's next earnings report is scheduled for release on February 2, 2025.
"MicroStrategy will hold a shareholder meeting to seek permission to raise capital to buy more bitcoins" was first published in (Block Guest).
