MicroStrategy plans more convertible-debt sales so it can buy more bitcoin

By Tomi Kilgore

MicroStrategy is also redeeming $650 million in convertible debt due next year

Shares of MicroStrategy Inc. took a hit Thursday, after the business-analytics and bitcoin play said it planned to offer $500 million in convertible debt.

The senior notes, due 2032, would be convertible to cash, MicroStrategy shares (MSTR) or a combination of both.

The company said it plans to use the proceeds from the sales of debt to buy more bitcoin (BTCUSD) and for general corporate purposes.

Read: MicroStrategy explains why bitcoin is better than stocks, bonds or gold.

MicroStrategy's stock fell 1.6% in premarket trading, while bitcoin prices lost 0.6%.

The expected potential pricing of the debt was not provided.

Separately, the company said it would fully redeem the $650 million in outstanding 0.75% convertible notes due 2025. The notes were convertible to MicroStrategy shares, at a conversion price of $397.99 per share.

While MicroStrategy's primary business is software, its stock has moved more like bitcoin than its software peers since it adopted the cryptocurrency as its primary treasury reserve asset.

Over the past three years, the correlation coefficient between MicroStrategy's stock and bitcoin is a very high 0.90, whereas a reading of 1.00 would mean they move exactly in sync. In comparison, the correlation between the stock and the SPDR S&P Software & Services ETF XSW, of which the stock is a component, is 0.59.

The stock has run up 153.9% year to date through Wednesday, while bitcoin has rallied 61.3%, the software ETF has slipped 1.3% and the S&P 500 has climbed 13.7%.

-Tomi Kilgore

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06-13-24 0729ET

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