MicroStrategy Inc. has submitted a prospectus to issue up to $21 billion of 8.00% Series A perpetual preferred stock.
Issuing preferred stock can provide funding support for MicroStrategy's Bitcoin strategy implementation and enhance market confidence, but it also comes with financial risks and control dilution issues.
• Funding Support: The issuance of preferred stock aims to raise up to $21 billion, providing substantial funding for the Bitcoin strategy. The company plans to accumulate Bitcoin through equity, debt financing, and operating cash flow revenues. The newly raised funds can be directly used for acquisitions, expanding Bitcoin holdings, and consolidating its position in the cryptocurrency space.
• Enhanced Market Confidence: The issuance of preferred stock demonstrates the company's commitment to Bitcoin investment, attracting more attention, drawing in investors, and enhancing the company's influence in the cryptocurrency market, potentially driving up Bitcoin prices and creating a favorable market environment for Bitcoin strategy implementation.
• Financial Risks: A dividend payment of 8.00% must be made on the preferred stock, increasing financial costs. If Bitcoin prices decline or investment returns are poor, the financial burden will increase, affecting the company's liquidity and ability to continue investing in Bitcoin.
• Control Dilution: The issuance of preferred stock will increase the company's total equity, diluting the control of existing shareholders. If new shareholders have differing opinions on the company's Bitcoin strategy, the decision-making process may be hindered, affecting the coherence and efficiency of Bitcoin strategy implementation. $BTC
