MicroStrategy’s Michael Saylor is shifting the company’s approach to raising capital. While saying this during a recent interview, he mentioned that beyond this fundraising plan, the firm will move away from its practice of leveraging Bitcoin and get into fixed-income securities instead. So far, MicroStrategy has used sales of its stock and convertible bonds as modes of funding for Bitcoin buys.
Saylor said the company would continue to raise funds for cryptocurrency acquisitions with fixed-income securities, such as convertibles. “We have $7.2 billion of converts, but $4 billion of them are essentially equity,” Saylor said. He said the company tries to create more “intelligent leverage” for the benefit of shareholders.
Stock surge and hedge fund interest in convertibles
This move comes after MicroStrategy accelerated its Bitcoin acquisition strategy. The firm has raised $42 billion to buy Bitcoin over three years since October. At this point, it had sold about two-thirds of its stock offering and a third of its convertible debt. The company buys the Bitcoins on regulated exchanges, including Coinbase.
MicroStrategy’s unconventional strategy has drawn attention. The company’s stock has surged by 500% this year, significantly outpacing Bitcoin’s 150% increase. Hedge funds are targeting the company’s fixed-income securities with convertible arbitrage strategies. The demand for its convertible bonds has helped MicroStrategy issue $6.2 billion in convertibles this year.
Looking ahead, Saylor warned that MicroStrategy may be getting too “de-levered.” The company plans to focus more on fixed-income securities, like convertibles, in early 2025. Saylor added that the firm would revisit its capital plan and adjust it per market conditions.
MicroStrategy joins Nasdaq 100 amid market surge
MicroStrategy’s success has grown its market cap past $90 billion and earned the company a spot in the Nasdaq 100 Index. According to Bloomberg Intelligence, that could spur more than $2 billion of share purchases from funds tracking the index.
Notwithstanding concerns about the sustainability of the strategy, Saylor has remained upbeat. He said he’d also be open to sitting on a possible digital assets advisory council if invited.
