Saylor’s Strategy Upsized Stock Offering to $1B for Bitcoin Purchases

Strategy, the world’s largest corporate Bitcoin holder, plans to raise nearly $1 billion through a stock offering to fund additional Bitcoin purchases.

The company, led by executive chairman Michael Saylor, plans to issue 11,764,700 shares of 10.00% Series A Perpetual Stride Preferred Stock at a public offering price of $85 per share.

Strategy estimates raising about $979.7 million from the net proceeds after deducting the underwriting discounts and commissions for the firm’s offering expenses, according to a June 6 announcement.

The company plans to use the almost $1 billion for “general corporate purposes, including the acquisition of Bitcoin and for working capital.”

Related: Swedish MP proposes Bitcoin reserve to finance minister

The move quadruples the company’s previously announced $250 million raise and introduces a new financing route beyond its historical use of common stock and convertible debt.

In contrast, Strategy’s perpetual preferred stocks will pay professional and institutional investors non-cumulative dividends equal to 10% of the stated amount.

At the current price of $103,800 per Bitcoin (BTC), the $1 billion would enable Strategy to acquire an additional 9,633 BTC, significantly more than its latest purchase of 705 Bitcoin for $75.1 million announced on June 2.

Related: Blockchain Group adds $68M in Bitcoin to corporate treasury

Strategy’s Bitcoin premium soars to +112%: VanEck

Strategy’s Bitcoin premium has soared to over 112% compared to spot Bitcoin prices, according to VanEck.

“We calculate a +112% premium to the combined fair value of MSTR’s BTC and core software business, driven by expectations of future BTC accumulation, regulatory advantages, and speculative positioning,” the asset manager stated in a May 22 research report.

“Every time MicroStrategy issues new shares to retail investors — shares backed by Bitcoin worth only a fraction of the stock price — the company pockets the difference and frames it as Bitcoin yield,” 10x Research CEO and head of research, Markus Thielen, told Cointelegraph.

However, the premium is still minor compared to Japanese investment firm Metaplanet’s Bitcoin premium, which soared to $596,154 on May 27, meaning that stockholders are paying more than fivefold for Bitcoin exposure via Metaplanet shares.

Investors who don’t understand the importance of a firm’s net asset value (NAV) may be “dramatically overpaying for their Bitcoin exposure” on a position that doesn’t provide additional upside leverage, according to a report by 10x Research published on May 27.

Magazine: Arthur Hayes $1M Bitcoin tip, altcoins ‘powerful rally’ looms: Hodler’s Digest, May 11 – 17