Andrew Bary
MicroStrategy bought $561 million of Bitcoin during the past week, continuing a string of weekly purchases that began in early November.
But the latest buys amounted to one of the smallest weekly purchase over the span. They were far below the $1.5 billion announced on Dec. 16 and the $2.1 billion disclosed on Dec. 9. MicroStrategy is the world's largest corporate holder of Bitcoin.
According to a securities filing Monday morning, the company funded the latest purchase with equity sales of $561 million under an "at-the-market" program of sales through a nine-member underwriting group under a $21 billion authorization announced in late October, .
The company has sold more than $14 billion of stock since then and another $3 billion of convertible debt to fund Bitcoin purchases.
MicroStrategy paid an average price of over $106,000 per coin for the latest purchase, made between Dec. 16 and Sunday. It now holds 444,262 Bitcoin worth about $43 billion.
About 9 a.m. Eastern on Monday, Bitcoin was up 0.6% to $95,700 in the past 24 hours but is down about 10% from its recent high.
The company now is valued at about 2.2 times the value of its Bitcoin stake, based on its enterprise value -- the sum of its market capitalization and its debt, Barron's estimates. The company's market cap is now around $89 billion, while it also has $7 billion of debt and a software business that could be worth $1 billion.
MicroStrategy shares were up 12% Friday to $364.20, but slipped 1.7% to $358 in premarket trading. The stock is down from a Nov. 21 high of $543 as the Bitcoin premium in the stock has come down from a peak of about 3.5 times.
MicroStrategy said it has achieved a Bitcoin "yield" of 47.4% so far this quarter. This isn't a yield in the traditional sense, but measures the percentage change in the ratio of Bitcoin to diluted shares outstanding between two dates.
The company, led by Chairman Michael Saylor, views the Bitcoin yield as a key measure of value creation for shareholders. The higher the figure, the better for holders.
The high Bitcoin yield reflects the willingness of investors to pay a big premium for MicroStrategy stock relative to the value of its Bitcoin.
Barron's wrote critically on MicroStrategy recently, arguing the Bitcoin premium in the stock was too high. We suggested Bitcoin enthusiasts should opt for exchange-traded funds like the iShares Bitcoin Trust instead.
Write to Andrew Bary at andrew.bary@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 23, 2024 09:20 ET (14:20 GMT)
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