MicroStrategy shares ‘audacious’ plan to buy more bitcoin

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MicroStrategy revealed yesterday that it intends to…wait for it…buy more bitcoin. 

I’d bet you weren’t on the edge of your seat, because you know that’s what the largest corporate holder of bitcoin — now with 252,220 BTC — does. But this time, the strategy looks a little different given what is dubbed as the “21/21 plan.” 

MicroStrategy plans to raise $21 billion from equity issuances through a new at-the-market facility, as well as another $21 billion by issuing fixed income securities.

The former facility is the largest of its kind in the history of US capital markets, Benchmark analyst Mark Palmer said in his latest research note.

Palmer is boosting his price target for the stock from $245 to an even $300. MSTR’s stock price was roughly $248 at 2 pm ET Thursday — up about 0.4% on the day. 

Since launching its bitcoin acquisition strategy in August 2020, MicroStrategy has used $9.9 billion (from capital markets and excess cash flow) to buy BTC, Palmer notes. The plan now is for the company to raise $10 billion in 2025, $14 billion in 2026, and $18 billion in 2027.

This phase of its strategy is “even more audacious,” the analyst adds. And it’s not exactly surprising given how successful MSTR stock has performed since adopting BTC as a reserve asset (up about 1,700%, he notes).

On the year, MSTR’s share price gain is well ahead of BTC’s rise, at 257% to 59% as of mid-day Thursday.    

The company’s BTC yield — the percentage change of the ratio between MSTR’s bitcoin holdings and its fully diluted share count — is “a more valuable metric for assessing the company’s value” than comparing MSTR’s market capitalization to its net asset value, Palmer argued. 

Company leaders said MicroStrategy’s year-to-date BTC yield is at 17.8%, below 2021’s 43.3% but higher than last year’s 7.3%.

With the 21/21 plan laid out, MicroStrategy executives raised the firm’s BTC yield annual target (for each of the next three years) from the 4-8% range to 6-10%.

We’ll be watching.

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