US-based business intelligence company MicroStrategy has announced an ambitious plan to increase its Bitcoin holdings. The company plans to raise $42 billion over the next three years, allowing it to acquire more Bitcoin assets.
The move comes as MicroStrategy’s stock price surges.
MicroStrategy’s $42 billion capital plan
MicroStrategy latest launches Announce “Plan 21/21” aims to raise $42 billion to support its continued acquisition of Bitcoin. The company plans to split the funds into an equity offering and a fixed income offering. This is quite an improvement compared to previous Bitcoin buying campaigns.
Additionally, MicroStrategy CEO explain“We basically created leverage by entering the convertible bond market.”
The company has become one of the largest corporate Bitcoin holders, and its stock price reflects this. Coin Gecko data The company is shown to be the largest public Bitcoin holder, controlling 252,220 Bitcoins. Latest capital plan will increase MicroStrategy’s Bitcoin holdings to 412,220 by 2025.
At the same time, the stock’s year-over-year increase reached 290%, far exceeding Bitcoin’s 64% increase during the same period.
The company is betting on the future of BTC, with management predicting the price will hit $175,000 in the meantime.
MicroStrategy’s Bold Bitcoin Strategy
The company’s strategy has impressed analysts, who are optimistic about its potential to continue delivering solid results. Benchmark analyst Mark Palmer attributes MicroStrategy’s impressive stock valuation to its unique strategy.
The company combines traditional financial instruments with Bitcoin. This provides a completely new approach to Bitcoin exposure, such as spot BTC ETFs.
Palmer said this compounding approach is critical to MicroStrategy’s stock trading at 2.7 times its net asset value.
The company’s management also emphasized the importance of developing a clear and robust financing plan to drive its BTC strategy, rather than relying on a less intentional approach.
MicroStrategy Quarterly Report Revealed sales of $116 million, Slightly lower than expected, but reflects the company’s strong focus on its Bitcoin strategy.
Its BTC return, a measure of the performance of its BTC strategy, is 17.8%. The company now expects that yield to increase to 6-10% annually, a figure analysts consider promising.
Move to raise $42 billion for Bitcoin sparks huge interest from investors and analysts. Palmer believes institutional demand for Bitcoin could push MicroStrategy stock prices higher.
He also noted that concerns about U.S. monetary policy and the possibility of its devaluation could spark more interest in Bitcoin from institutional investors.
Alexander Blume, CEO, Two Prime Digital Asset supply Different views on the company’s Bitcoin yield. He described it as a “language laundering” move aimed at bringing the company’s Bitcoin net asset value (NAV) closer to its market capitalization.
two premier ceo @AlexanderBloom and @TheBlock__ About MicroStrategy’s bold $42 billion capital plan
Read more: https://t.co/QrTYQ5Ks4r
— Two Prime digital assets (@two_prime) October 31, 2024
Bloom believes that while this strategy is smart, it still carries risks, especially if the value of Bitcoin drops sharply..
Regardless, MicroStrategy’s bold $42 billion capital plan highlights its continued commitment to BTC. While there are risks to the plan, especially if Bitcoin falls in value, many analysts believe the company is well-positioned to benefit from increased institutional interest.
