In a strategic move to bolster its Bitcoin holdings, MicroStrategy Incorporated (NASDAQ: MSTR) has announced plans to raise up to $2 billion through one or more offerings of perpetual preferred stock. This initiative is part of the company’s ambitious 21/21 Plan, which aims to raise $21 billion through equity and $21 billion through fixed-income instruments over the next three years(2)(4).
The 21/21 Plan: A Strategic Approach to Funding Bitcoin Purchases
MicroStrategy, led by CEO Michael Saylor, has been at the forefront of institutional Bitcoin adoption. The company’s 21/21 Plan is designed to significantly enhance its Bitcoin treasury reserve by leveraging various funding mechanisms, including equity, debt, convertible notes, and preferred stock(2)(3).
Perpetual Preferred Stock: A New Avenue for Capital Raising
The decision to issue perpetual preferred stock marks a new chapter in MicroStrategy’s capital raising efforts. This type of investment offers dividends but has no set maturity date, making it an attractive option for investors seeking stable returns. The company aims to attract institutional investors, such as insurance companies, pension funds, and banks, which favor perpetual preferred stock for its fixed dividend payments and relatively stable value(2)(4).
Analyst Insights: A Positive Outlook
Benchmark’s Mark Palmer, a top-ranked analyst, has expressed optimism about MicroStrategy’s plan to tap the perpetual preferred market. Palmer believes that this move underscores the shareholder value created through the company’s treasury operations, justifying the premium to its net asset value (NAV) at which its stock trades. He rates MSTR shares a Buy, with a Street-high $650 price target, implying a potential return of ~71% over the next year(2).
Market Sentiment: A Strong Buy Consensus
MicroStrategy’s stock has received a Strong Buy consensus rating from analysts, with a full house of Buys and an average price target of $529.57, indicating a potential return of ~40% over the next year(2).
Conclusion
MicroStrategy’s decision to issue perpetual preferred stock is a strategic move to diversify its capital raising efforts and attract institutional investors. With a strong analyst consensus and a well-defined plan to bolster its Bitcoin holdings, the company is poised to continue its growth trajectory. As the cryptocurrency market continues to evolve, MicroStrategy’s innovative approach to funding its Bitcoin purchases is likely to remain a key focus for investors.
Sources:
(1) Yahoo Finance: MicroStrategy Incorporated (MSTR) Stock Price, News, Quote & History
(2) TipRanks: Top Analyst Bangs the Drum on MicroStrategy Stock
(3) MicroStrategy: Investor Relations
(4) MicroStrategy: Press Release – MicroStrategy to Target a Capital Raise of Up to $2 Billion of Preferred Stock
(5) TradingView: MSTR Stock Price and Chart – MicroStrategy
Call to Action:
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