MicroStrategy's preferred MSTR issuance seeks 'returns and volatility' at 1.5x bitcoin, Saylor says

Corporate bitcoin holder MicroStrategy recently expanded the scope of its bond offering by tapping into the perpetual preferred stock market. The company is planning to raise up to $2 billion this quarter by issuing preferred stock, advancing its “21/21” plan to sell $42 billion in equity and fixed-income securities. 

The company will attempt to raise that money through one or more public underwritten offerings of perpetual preferred stock, which will be senior to MicroStrategy's Class A common stock. Perpetual preferred stock does not have a maturity date or a mandatory redemption timeline, instead paying fixed dividends indefinitely as long as the issuing company remains operational.

Speaking on Jan. 13 during a Benchmark-hosted investor meeting in Orlando, Michael Saylor , MicroStrategy co-founder and executive chairman, said the company’s potential issuance of perpetual preferred stock would be "the latest means through which it would provide investors with levered exposure to bitcoin." He noted the company is aiming to offer investors "both returns and volatility at factors of 1.5x those of bitcoin itself."

Saylor said MicroStrategy’s decisions regarding the timing and amounts of the securities it issues and of the bitcoins it purchases included both programmatic and opportunistic elements, according to an investor note from Benchmark equity analyst Mark Palmer, noting that bitcoin and other capital markets each had their own distinct “moods” he and his team would look to read and react to.

“We believe it is likely that any preferred stock the company offers would include both features, with convertibility into common shares providing preferred stock investors with elements of volatility and optionality that they do not often see,” Palmer wrote in a Jan. 6 note . “These securities, in essence, would offer preferred investors a unique proposition: an embedded, indefinite call option on a company whose value is largely tied to a highly volatile cryptocurrency.”

Views on Trump

Saylor also trumped President-elect Donald Trump and his nominees for his new cabinet as being ideologically aligned with crypto. He also said the controversial Staff Accounting Bulletin 121 , or SAB 121, could be repealed during the first week of the Trump Administration.

SAB 121 is a bulletin that requires firms that custody cryptocurrencies to record their customer's crypto holdings as liabilities on their balance sheets. Last year, lawmakers voted on a measure to repeal that guidance but was later vetoed by President Joe Biden.

“Asked about the likelihood that the U.S. would establish a strategic bitcoin reserve, Mr. Saylor deferred, saying that whether it would happen or not would come down to politics,” Palmer wrote in the note. “At the same time, he noted that what was remarkable about the discussion regarding the establishment of such a reserve was that it was occurring just 48 months after there had been earnest questions posed about whether the U.S. government would look to ban bitcoin.”

Benchmark has a “buy” rating on MSTR stock and a price target of $650. The stock, which outperformed bitcoin in 2024, is up 4.5% to $357.75 per share at publication time.

MicroStrategy said Monday it purchased another 2,530 BTC for about $243 million at an average price of $95,972 per bitcoin, marking the 10th straight week the business intelligence company bought more bitcoin. The company now holds 450,000 BTC, worth over $40 billion.

Bitwise CIO Matt Hougan earlier this week said corporate bitcoin acquisition strategies are an “ overlooked megatrend ” big enough to tilt the market significantly upward this year.