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- Michael Saylor has confirmed MicroStrategy needs more leverage to boost its Bitcoin strategy.
- MicroStrategy shares have benefitted immensely over the year, earning inclusion in the Nasdaq 100 index.
Michael Saylor, a co-founder and Chairman of MicroStrategy, recently disclosed a new fundraising strategy for the software development firm. With MicroStrategy already focused on Bitcoin (BTC) acquisition, many now watch to see the impact of the firm’s new strategy on the leading coin.
MicroStrategy to Focus on Fixed-income Securities for Fundraising
Saylor disclosed in a recent Bloomberg interview that MicroStrategy would continue raising capital primarily through fixed-income markets for Bitcoin purchases once its current fundraising program is depleted.
The co-founder disclosed this when asked how he expects to fund future cryptocurrency purchases. MicroStrategy has purchased Bitcoin via new equity and convertible bond sales. Users have often benefited from the latter, as the firm’s stock rallied toward the price at which it became exchangeable for shares.
Saylor stated,
We have $7.2 billion of converts, but $4 billion of them are essentially equity, they’re through the strike price, the call price, and they are trading with a delta of approximately 100%, they are looking like equity.
He added that the firm intends to build more intelligent leverage to benefit its common stock shareholders.
In October, MicroStrategy announced plans to raise $42 billion solely to purchase crypto for the next three years. However, MicroStrategy is currently far ahead of its fundraising goal. The business intelligence firm has sold about a third of the convertible debt and around two-thirds of the stock portion it planned to offer.
“When we announced that, it wasn’t clear how enthusiastic the capital markets would be, but we got a very enthusiastic reception…We went faster than we had thought we were going to go on Oct. 30,” Saylor disclosed.
Over the past six weeks, MicroStrategy has announced multibillion-dollar acquisitions of Bitcoin every Monday. While this move has raised both the prices of its shares and Bitcoin, many have questioned the strategy’s sustainability.
Will MicoStrategy’s Approach Portend Well for Bitcoin?
Saylor said MicroStrategy would continue raising capital primarily through fixed-income markets. He said the firm will revisit its capital plan once it reaches its fundraising goal. According to Saylor, the corporation will implement a new strategy “subject to market conditions at the time.”
Saylor warned the company is becoming more deleveraged. Hence, he plans to get more leverage.
The company’s market capitalization has surged to over $90 billion despite the concerns raised about the strategy. The surge has helped it win an inclusion in the Nasdaq 100 Index on Friday, per a CNF report. Bloomberg Intelligence even predicted that the Nasdaq inclusion may drive over $2 billion of purchases of its shares from funds that track the tech benchmark index.
The price of Bitcoin is anticipated to move alongside MicroStrategy’s shares. However, BTC has dropped 5.18% below the $100,000 mark and is currently trading at $98,775.
