MicroStrategy Inc. faces market turbulence as it announces intentions to issue $500 million in convertible debt, causing shares to dip. The senior notes, maturing in 2032, offer conversion to cash, MicroStrategy shares, or a mix of both. The company aims to utilize the proceeds for expanding its bitcoin holdings and general corporate purposes.
In premarket trading, MicroStrategy’s stock experienced a 1.6% drop, mirroring a 0.6% decrease in bitcoin prices. The pricing details of the debt offering remain undisclosed.
Simultaneously, the firm disclosed plans for the complete redemption of $650 million in 0.75% convertible notes due in 2025. These notes, convertible at $397.99 per share, represent a strategic shift towards bitcoin as a treasury reserve asset.
Despite its software-centric business model, MicroStrategy’s stock exhibits a strong correlation with bitcoin, with a coefficient of 0.90 over three years. This move contrasts sharply with its peers in the software sector, as highlighted by a 0.59 correlation with the SPDR S&P Software & Services ETF XSW.
Year-to-date performance underscores MicroStrategy’s alignment with the volatile cryptocurrency market, with its stock soaring 153.9% while bitcoin gains 61.3%. In contrast, the software ETF has seen a marginal decline of 1.3%, while the S&P 500 has risen by 13.7%.
