5年漲超20倍！比特幣影子股MicroStrategy飆漲背後暗藏什麼玄機？

$MicroStrategy (MSTR.US)$ Once a typical victim of the internet bubble in 2000, the stock price plummeted from $300 to $0.42. In 2020, the company's founder made a fateful decision to transform the company into a cryptocurrency investment platform: All-in on bitcoin, and claimed that bitcoin is "the most valuable asset in the world."

With the recovery of bitcoin, Microstrategy has returned to its peak, becoming a 'bitcoin shadow stock.' This year, Microstrategy's market cap once soared to nearly 70 billion dollars, with the stock price increasing six-fold in a year and nearly twenty-fold over the past five years. The current stock price is reported at 328 dollars.

Microstrategy has consistently invested heavily in bitcoin through equity and bond financing, achieving 'riches' through the appreciation of bitcoin, which is also the core reason for the company's soaring stock price. Behind the myth of Microstrategy's wealth lies its unique equity financing method—ATM (At-the-market offerings).

ATM refers to issuing or increasing shares at market price, which means that a publicly listed company gradually sells newly issued shares or the shares it already owns into the secondary trading market at current market prices through designated brokers.

Recently, Microstrategy made a bold plan to increase financing to gather ammunition for the 'bitcoin buying frenzy.' This plan is called the '21/21 plan,' which aims to raise 42 billion dollars through 21 billion dollars in equity and 21 billion dollars in bonds over the next three years. At current prices, this means the company will purchase nearly 600,000 bitcoins, accounting for about 3% of the total bitcoin supply.

The 21 billion dollars financing in this plan is being completed through the ATM equity financing method, and has already raised over 3.5 billion dollars. What characteristics does the ATM mechanism have, and can it help Microstrategy reach new heights again?

The ATM mechanism behind the surge in stock prices.

Microstrategy is the company holding the most bitcoin among U.S. listed companies, and its stock price is deeply tied to bitcoin. Initially, it bought using cash, and later leveraged by raising funds through methods like ATM, resulting in Microstrategy's stock price increasing even more sharply than bitcoin.

Microstrategy employs banks to sell stocks through the so-called 'at-the-market' (ATM) issuance method, allowing the company to sell stocks without submitting additional regulatory documents. This model gives all investors an equal opportunity to participate in purchasing stocks, without favoring institutional investors, aligning with the decentralized spirit of cryptos.

The ATM model can also raise funds flexibly, avoiding the significant discount issuances that occur in traditional financing, particularly suitable for high-volatility stocks like Microstrategy. Meanwhile, Microstrategy's high trading volume makes large-scale stock sales feasible, and its stock market cap enjoys a 2.8 times premium relative to its bitcoin holdings, creating arbitrage opportunities in financing.

Microstrategy raises funds through the ATM model, utilizing the high volatility of the stocks and bitcoin markets to maximize its bitcoin holdings while maintaining a high valuation of the company's stock price. However, the success of this strategy heavily relies on the continued rise in bitcoin prices, so the potential risks posed by market volatility cannot be ignored.

The Financial Times of the united kingdom analyzed the characteristics of the ATM equity financing mechanism, specifically:

• Flexibility of ATM stock issuance/increase.
  ATM stock issuance allows companies to gradually push new stocks to the market instead of issuing them all at once through traditional methods. This flexibility is particularly suited for companies with significant stock price volatility like Microstrategy, as it allows for flexible fundraising during price peaks, avoiding the issues of steep discounts caused by large-scale issuances.

• In line with the spirit of decentralization in cryptos.
  "Everyone can participate", the ATM provides all investors equal opportunities to purchase stocks, without favoring institutional investors. This model of minimizing intermediary intervention aligns with the decentralization concept advocated by cryptos. Moreover, using the ATM eliminates the need for management to spend time and energy meeting with fund managers or attending roadshows to raise funds.

• Applicable to capital-intensive industries.
  The ATM model is widely popular in capital-intensive industries, such as life sciences and the energy sector. MicroStrategy demonstrates the versatility of this tool by utilizing ATM fundraising in industries like life sciences and the energy sector.

• High liquidity supports ATM operations.
  microstrategy's stock has high liquidity, allowing it to sell large volumes of stocks through the ATM without putting too much pressure on the stock price. The company can gradually sell shares based on market conditions, and even sell large amounts of stock when fund managers make a quote, but management has complete decision-making power in this regard.

• ATM provides arbitrage opportunities.
  Due to the highly leveraged balance sheet, microstrategy's stock market cap has a 2.8 times premium relative to the value of its held bitcoin. The funds obtained from selling stock through the ATM can be used to buy more bitcoin. This means that issuing more stocks actually increases the amount of bitcoin represented per share, thus achieving an arbitrage effect.

• The risks are exposed when the price of bitcoin drops.
  Although current ATM operations benefit from the rise in bitcoin, the article mentions two major potential risks: first, if the price of bitcoin drops, the premium of stocks relative to net assets (bitcoin) may shrink or even turn into a discount; second, continuous stock issuance could gradually erode the premium, leading to a decline in stock prices to the actual value of bitcoin.

Editor/Somer