MicroStrategy Plans to Sell Shares to Buy More Bitcoin. The Stock Is Falling.

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MicroStrategy

stock has surged in recent days amid a rally in cryptocurrency prices—but the shares have turned lower following news that the business intelligence company with major Bitcoin holdings plans to sell shares.

In a filing Friday with the Securities and Exchange Commission),

MicroStrategy

(ticker: MSTR) said it may offer and sell up to $500 million in common stock for the purposes of buying more

Bitcoin.
The company’s market capitalization is currently just shy of $3 billion.

Shares in MicroStrategy fell 3% in premarket trading Monday, after gaining 11.7% on Friday. The stock was in the green earlier in the premarket session.

Founded in 1989 by Michael Saylor, MicroStrategy was long a software company focused on business intelligence. Saylor has emerged as one of the most high-profile Bitcoin bulls in recent years, leading a strategic pivot that has seen MicroStrategy buy and hold Bitcoin on its balance sheet, turning the group into one of the largest owners of the cryptocurrency.

The company owned 129,699 Bitcoins as of the end of June, which is about $2.9 billion at current market prices. As a result, MicroStrategy is one of a number of stocks that trade in step with the price of the largest digital asset.

Bitcoin prices jumped above $20,000 on Friday after trading as low as around $18,500 in the days prior, with the crypto extending its rally amid volatile trading on Monday to trade above $22,000. 

Bitcoin prices remain around their lowest all year, and sit at less than one-third Bitcoin’s all-time high near $69,000 in November 2021. That could be why MicroStrategy wants to sell stock and buy more Bitcoin. In its latest financial results—for the June quarter—the company said its average cost per Bitcoin was around $30,664, so prices closer to $20,000 could look attractive for the long-term crypto holder.

Write to Jack Denton at [email protected]