MicroStrategy is up 180% this year after selling debt for more bitcoin

Every time Michael Saylor utters the word “Bitcoin,” Micro strategy shares pop. He’s been doing a lot of talking lately.

On Monday, the founder of MicroStrategy posted on social media platform X that his company had just purchased another 12,000 bitcoins for nearly $822 million “using proceeds from convertible notes and excess cash.” This brings MicroStrategy’s total holdings to 205,000 bitcoins, now worth over $15 billion as the cryptocurrency continues to hit new highs.

Bitcoin gained 2.7% on Wednesday, reaching $73,400.

MicroStrategy, a company that develops software but primarily serves as a proxy for bitcoin, rose 11% on Wednesday, after a 7.4% gain on Tuesday, which followed a 4.1% rise on Monday and a 9.7% jump on Friday. Shares are already up 68% since March 6, the day the company announced pricing from selling debt and has jumped 180% this year after jumping 346% in 2023.

Saylor told CNBC’s “Squawk Box” on Monday that bitcoin will “eat gold.” He said many more institutional investors will own the digital currency as it is added to exchange-traded funds. Saylor is also optimistic about next month’s halving process, which happens every four years and slows down the coin supply, reducing the amount of sales.

“Bitcoin’s price will need to adjust to meet investor demand,” Seiler said. “That’s what’s going to happen next for the asset class.”

Micro strategy said on Monday that it has completed the offering of 0.625% convertible notes due 2030, with net proceeds of approximately $782 million. Canaccord Genuity analysts wrote in a note the other day that they believe this is the first $800 million convertible due 2030 to be marketed at a coupon rate below 1% with such a high conversion premium.

“While much of the company’s BTC build-up late last year and early this year was funded using equity,” the analysts wrote, “the company is instead leveraging more of its full capital structure this time around by issuing a convertible “.

MicroStrategy said in the announcement that it is “using the net proceeds from the sale of the notes to acquire additional bitcoins.”

MicroStrategy has purchased nearly 16,000 bitcoins since the beginning of the year.

The value of his stock appreciates much faster than the Bitcoin he buys. As of Monday, Canaccord analysis showed MicroStrategy’s equity value premium over its bitcoin holdings was 86%.

This number has increased significantly in the last three days. Using Canaccord’s methodology, MicroStrategy’s equity value premium is now up to around 99%.

Founded in 1989, MicroStategy has a business in enterprise software and cloud-based services, but its shareholder value is almost entirely tied to its ownership of Bitcoin. The company announced its plan to invest in bitcoin in mid-2020, revealing in an earnings release that it will commit $250 million over the next 12 months to “one or more alternative assets,” which could include digital currencies like bitcoin.

At the time, MicroStrategy’s market capitalization was about $1.1 billion. The company is now worth $30 billion.

“Is there a company in the world you wouldn’t want to invest in that could borrow $1 billion at less than 1 percent interest to invest in your best idea?” Seiler asked on CNBC. “It gave our shareholders more bitcoin per share this week than they had a few weeks ago, so that’s very accretive for them.”