MicroStrategy founder Michael Saylor expressed his views on future sources of funding in an interview with Bloomberg Television.
When asked how to raise funds for future cryptocurrency acquisitions, Michael Saylor stated that so far, MicroStrategy has raised funds using a combination of new equity and convertible bond sales, the latter of which has provided returns for holders as the company's stock price approaches the conversion price.
Michael Saylor said in an interview with Bloomberg Television on Wednesday:
We have $7.2 billion of convertible debt, but $4 billion of that is essentially equity because it has surpassed the strike price and put price, trading at about 100% delta, which essentially looks like equity now. We hope to reestablish smarter leverage to benefit common stockholders.
MicroStrategy has become a major investment narrative this year, as the company accelerated the launch of an unconventional plan in late October to raise $42 billion specifically for purchasing and holding cryptocurrencies over the next three years. The company has already sold about two-thirds of the equity portion of the plan and about one-third of the convertible bond portion.
The company has announced for several consecutive weeks the purchase of billions of dollars worth of Bitcoin, driving its stock price up as the token price rises. Data shows that MicroStrategy's stock price has increased by about 500% this year, far exceeding Bitcoin's approximately 150% increase.
Hedge funds have been utilizing their fixed-income securities for convertible arbitrage strategies—buying bonds and shorting stocks, essentially betting on the volatility of the underlying stock. This demand helped MicroStrategy successfully issue $6.2 billion in convertible debt this year.
The company plans to focus more on convertible debt and other fixed-income securities in the first quarter of 2025, as Michael Saylor warned that MicroStrategy has been too conservative in its use of corporate funds and needs more leverage to support its growth strategy.
We will revisit the capital plan and develop a new plan based on the market conditions at that time.
Despite some concerns raised by the strategy, the company's market capitalization soared to over $90 billion, helping it to be included in the Nasdaq 100 index at the close of trading on Friday. According to estimates from Bloomberg Intelligence, this could prompt funds tracking that tech benchmark index to purchase over $2 billion worth of MicroStrategy stock.
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