MicroStrategy Pricing $563.4 Million IPO

Source: Investing Published 01/31/2025, 16:08

MicroStrategy Inc. (NASDAQ:MSTR), known for its large Bitcoin holdings and impressive 578% return over the past year, has priced its public offering of 7.3 million shares of 8.00% Class A Perpetual Preferred Stock at $80 per share. With a market cap of $84.88 billion, the company currently appears slightly overvalued according to InvestingPro’s fair value analysis. The sale is expected to close on February 5, 2025, subject to customary closing conditions.

The company expects net proceeds of approximately $563.4 million, after deducting underwriting costs, commissions, and estimated offering expenses. The company intends to use the funds for general corporate purposes, including purchasing Bitcoin and increasing working capital. InvestingPro data reveals that the company operates with a moderate level of debt.

although the current current ratio of 0.65 indicates that short-term liabilities exceed liquid assets.

MicroStrategy’s perpetual preferred stock will have a liquidation preference of $100 per share, with a cumulative dividend rate of 8.00% per annum. The company will pay the dividend quarterly starting March 31, 2025.

and may distribute it in cash, Class A common stock, or a combination of both, at its discretion.

Shareholders will be permitted to convert their perpetual preferred stock into Class A common stock at an initial rate of 0.1000 shares per preferred stock, equivalent to a conversion price of $1,000.00 per Class A common stock. Certain events may adjust this rate.

MicroStrategy reserves the right to redeem all shares of perpetual preferred stock if the total liquidation preference falls below 25% of the issued amount or if certain tax-related events occur. The redemption prices will be equal to the liquidation preference plus any accumulated and unpaid dividends.

In the event of a material change, as specified in the Certificate of Appointments, shareholders may require MicroStrategy to repurchase their perpetual preferred shares at the liquidation preference plus any accumulated dividends.

The joint bookrunners for the offering are Barclays, Moelis & Company LLC, BTIG, TD Cowen, and Keefe, Bruyette & Woods, with AmeriVet, Bancroft Capital, and The Benchmark Company as co-managers.

The company is making the offering through a shelf registration statement filed with the Securities and Exchange Commission. The prospectus supplement and accompanying prospectus are available on the SEC’s website or directly from the managing companies. Investors should note that MicroStrategy will release its next earnings report on February 5, 2025. For deeper insights into MicroStrategy’s financial health and detailed analysis, including 13 additional ProTips and comprehensive valuation metrics, explore InvestingPro’s exclusive research report, part of their coverage of over 1,400 U.S. stocks.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities. It is based on a MicroStrategy press release.

In other recent news, MicroStrategy revealed pricing details for its perpetual preferred stock offering at $80.00 per share.

with 7,300,000 shares for sale. The transaction is expected to generate net proceeds of about $563.4 million, and the company will use those proceeds to fund general corporate purposes, including purchasing Bitcoin. Investors will receive an annual dividend rate of 8.00%.

with the option to convert their shares into MicroStrategy Class A common stock. In a move that has proven transformative, MicroStrategy has strengthened its commitment to Bitcoin by acquiring an additional 10,107 Bitcoin, worth over $1 billion. Chairman Michael Saylor received recognition for starting the trend of public companies adopting Bitcoin as a treasury asset.

MicroStrategy also announced an update to its AI-powered MicroStrategy ONE platform. The update focuses on personalizing the AI ​​experience.

allowing the Auto AI bot to deliver more human-like conversations by understanding ambiguous questions through context and user history.

Meanwhile, Norway’s sovereign wealth fund increased its indirect exposure to Bitcoin by 153% year-over-year, to a total of 3,821 Bitcoin. This growth in Bitcoin exposure comes from investments in companies like MicroStrategy, which leads the fund’s Bitcoin-related investments. These are the latest developments shaping the financial landscape.