By Paul R. La Monica
MicroStrategy has lowered the price of its coming stock offering, a possible sign of investors' growing wariness of the company's heavy reliance on Bitcoin.
In a filing Friday, the software company, which now does business under the name of Strategy, said it will sell perpetual preferred stock at $85 a share. That's 15% below the $100 price it originally expected when it filed for the sale earlier this week. MicroStrategy, however, boosted the size of its offering: It will sell 8.5 million shares to net $711.2 million after expenses, up from its initial plan to offer five million shares at $100 each.
Perpetual preferred shares are like a combination of bonds and stocks; their typically larger dividend payouts result in higher yields, like fixed income securities. They often don't have voting rights, though.
According to calculations by Barron's, these preferred shares will carry a dividend yield of nearly 12% at the price of $85, above the 10% expected at the $100 price. But the company also said in the offering that if it misses or delays any dividend payments, the dividends could be compounded and eventually reach yields as high as 18%. The offering is expected to settle March 25.
MicroStrategy, which has morphed into a major investor in Bitcoin, might have needed to offer a lower price and juicier yield to entice buyers, who have become more cautious of cryptocurrencies in recent weeks. Bitcoin prices have tumbled nearly 25% from a record high of just under $110,000 earlier this year to below $84,000. Bitcoin and other cryptocurrencies, like stocks, are considered risky assets, and have sold off along with the broader market on concerns about slowing economic growth and U.S. policy uncertainty.
MicroStrategy stock, which has nearly doubled in the past 12 months, has cooled along with Bitcoin. Shares are still up 2.5% so far this year, but they are now trading 45% below the all-time high of $543 that they hit two weeks after the Nov. 5 election .
Despite this, the company continues to buy more Bitcoin, albeit at a slower pace than it had been previously. MicroStrategy now owns nearly 500,000 Bitcoin, about 2.5% of the approximately 20 million Bitcoin in circulation. In fact, the company said Friday it expects to use some of the offering's net proceeds to acquire more Bitcoin.
Crypto enthusiasts -- including MicroStrategy executive chairman, co-founder, and former CEO Michael Saylor -- remain incredibly bullish on Bitcoin's prospects.
That's in part due to a friendlier regulatory environment under the Trump administration. President Donald Trump, initially a crypto skeptic, has embraced Bitcoin as of late; he even gave a virtual address from the White House to the Digital Asset Summit crypto conference in New York this week.
Still, MicroStrategy's stock was down more than 1% Friday following the news of the offering. Shares of other stocks with big ties to crypto, such as Coinbase, Robinhood, Block and Bitcoin miners MARA Holdings and Riot Platforms, were all lower along with the broader market.
The preferred shares will be available to retail investors through Fidelity and will trade under the ticker symbol of STRF.
Write to Paul R. La Monica at paul.lamonica@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
March 21, 2025 13:06 ET (17:06 GMT)
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