MicroStrategy to Raise $750 Million via Stock Sale for Expanding Bitcoin Reserves, BTC Holdings Surpass 152,800
MicroStrategy has announced its plans to issue and sell up to $750 million in stock to fund additional Bitcoin purchases and other uses. The company has been steadily increasing its Bitcoin holdings, and as of July 31, 2023, it held an impressive 152,800 bitcoins, with a significant addition of 12,333 bitcoins during the second quarter of 2023, marking the largest single-quarter increase since Q2 2021.
To facilitate the sale of its class A common stock, MicroStrategy has entered into a Sales Agreement with Cowen and Company, LLC, Canaccord Genuity LLC, and Berenberg Capital Markets LLC. According to the agreement, MicroStrategy can offer and sell shares of its class A common stock up to an aggregate offering price of $750 million from time to time through the mentioned Agents acting as sales agents. The Agents will work with the company to sell the stock at market prices using commercially reasonable efforts, and they will be compensated with up to 2.0% of the gross proceeds of any shares sold under the Sales Agreement.
MicroStrategy’s class A common stock is listed on The Nasdaq Global Select Market under the trading symbol “MSTR.” As of July 31, 2023, the last sale price of the class A common stock was $437.88 per share.
The funds raised through the stock sale will be used to further increase the company’s Bitcoin holdings, which it considers a crucial strategic move amidst the promising backdrop of increasing institutional interest, accounting transparency, and regulatory clarity for Bitcoin. MicroStrategy’s Chief Financial Officer, Andrew Kang, expressed confidence in the company’s ability to raise capital efficiently through its equity program and utilize cash from operations to bolster its Bitcoin reserves.
Alongside the news of the stock offering, MicroStrategy also released its financial results for the second quarter of 2023. The company reported total revenues of $120.4 million, representing a slight 1% decrease year-over-year, or a flat performance at constant currency. Notably, software licenses revenues increased by 4% year-over-year, and subscription services revenues surged by 42% year-over-year.
Despite these positive results, the company reported a loss from operations of $26.7 million for the second quarter of 2023. However, this was a significant improvement compared to the massive loss of $918.1 million in the second quarter of 2022, which included impairment losses on the company’s digital assets.
MicroStrategy’s cash and cash equivalents increased to $66.0 million as of June 30, 2023, compared to $43.8 million as of December 31, 2022. The company’s digital assets, mainly consisting of bitcoins, had a carrying value of $2.323 billion, reflecting cumulative impairment losses of $2.196 billion since acquisition and an average carrying amount per bitcoin of approximately $15,251.
MicroStrategy’s focus on increasing its Bitcoin holdings and utilizing its equity program to fund these purchases underscores its belief in the long-term potential of the digital asset. As institutional interest in Bitcoin continues to grow, MicroStrategy aims to position itself strategically in the cryptocurrency market and capitalize on potential future price appreciation.
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