In a significant move that reiterates its commitment to cryptocurrency investments, MicroStrategy (MSTR) has added an impressive 4,048 bitcoins to its portfolio over the past week. This latest acquisition elevates the company’s total bitcoin holdings to an astounding 636,505 coins. The purchase was made for a total investment of just under $450 million, translating to an average cost of approximately $110,981 per coin.
The funding for this acquisition primarily came from the sale of common stock, with a smaller portion derived from sales of the company’s preferred shares. This approach has sparked some controversy, especially as Michael Saylor, the company’s CEO, and his team had previously assured investors that they would refrain from issuing additional shares when the stock’s market to net asset value ratio (mNAV) dipped below 2.5x.
Recent fluctuations in the stock price have caused the mNAV to decline to around 1.5x, prompting a reassessment of this commitment. With limited demand for preferred stock and no interest in convertible debt, the company found itself with few options if it wished to sustain its aggressive bitcoin purchasing strategy.
Critics of the common stock sales express concern that selling shares at such a minor premium could dilute existing shareholder value. This becomes particularly pressing in light of the company’s substantial bitcoin holdings, which are currently valued at nearly $70 billion based on the current bitcoin price of $109,400.
As a consequence of these developments, shares of MicroStrategy have seen a modest downturn in premarket trading, reflecting investors’ apprehensions regarding the company’s financing choices and future performance amidst a complex crypto market landscape.
