MicroStrategy (MSTR.O) stock price rose 13% on Monday, closing at $384.79, after reaching an all-time high earlier in the day.
MicroStrategy is taking advantage of its soaring stock price to issue a $1.75 billion convertible bond, planning to use the proceeds to purchase more Bitcoin.
After the close of trading on Monday, MicroStrategy announced plans to privately issue a batch of convertible bonds with a 0% interest rate to qualified institutional investors under Rule 144A of the Securities Act of 1933. This transaction could become one of the largest in the convertible bond market this year.
The company had issued $1 billion in convertible bonds at the end of September, making it one of the largest issuers in the hybrid securities market.
MicroStrategy's stock price rose 13% to $384.79 on Monday, hitting an all-time high earlier in the day. Since the November 5 election, the stock has increased by more than 65%, primarily driven by a more than 30% increase in Bitcoin. Bitcoin's trading price on Monday evening was close to $92,000, up 3% for the day. So far this year, MicroStrategy's stock price has skyrocketed more than sixfold.
MicroStrategy has been aggressively purchasing Bitcoin this month, raising approximately $6.6 billion through stock sales since October 31, and using those funds to buy an equivalent amount of Bitcoin. The company announced its latest Bitcoin purchase earlier on Monday, which was funded by equity sales and valued at $4.6 billion.
MicroStrategy's issuance of convertible bonds is part of its '21-21 Plan'. Under this plan, the company will issue $21 billion in stock and bonds over the next three years to fund Bitcoin purchases.
MicroStrategy's new convertible bond has an interest rate of 0%, thanks to strong market demand for the security. Most convertible bonds have positive interest rates. One reason for its high demand is the high volatility of MicroStrategy's stock, making the convertible bonds highly attractive to arbitrageurs. These arbitrageurs typically buy convertible bonds and short the company's stock. MicroStrategy is one of the most volatile major stocks in the market.
Influenced by arbitrageurs shorting before the convertible bond trading, the company's stock price fell 1% in after-hours trading to $381.
MicroStrategy has a market capitalization of approximately $86 billion, currently nearly three times the value of its 331,200 Bitcoins. The company is the largest corporate holder of Bitcoin globally, owning over 1.5% of the total supply.
MicroStrategy believes that issuing stock and convertible bonds to purchase Bitcoin creates value for shareholders.
Article reposted from: Jin Shi Data
