MicroStrategy acquires another 15,350 bitcoin for $1.5 billion, taking holdings to 439,000 BTC
2024-12-16
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Business intelligence firm and corporate bitcoin holder MicroStrategy acquired an additional 15,350 BTC for approximately $1.5 billion at an average price of $100,386 per bitcoin between Dec. 9 and Dec. 15, according to an 8-K filing with the Securities and Exchange Commission on Monday.
It follows the sale of a further 3,884,712 MicroStrategy shares during the same period for the same amount. As of Dec. 15, the company said approximately $7.65 billion worth of shares remained available for sale as part of its planned $21 billion equity offering and $21 billion in fixed-income securities, targeting a total $42 billion capital raise for further bitcoin acquisitions.
The company now holds 439,000 BTC, worth over $45 billion. MicroStrategy’s total holdings were bought at an average price of $61,725 per bitcoin, a total cost of around $27.1 billion, including fees and expenses, according to the company's co-founder and executive chairman, Michael Saylor. To put that in perspective, MicroStrategy now holds around 2.1% of bitcoin’s total 21 million supply.
MicroStrategy's latest announcement is the sixth week in a row following news last Monday that it had acquired another 21,550 BTC for roughly $2.1 billion in cash at an average estimated price of $98,783 per coin, including fees and expenses, and $1.5 billion worth of bitcoin the week before.
MicroStrategy has added $17.5 billion in bitcoin — around 39% of its total $45 billion position — over the past six weeks alone, and its $92 billion market cap now trades at a significant premium to its bitcoin net asset value. Many investors have reservations about MicroStrategy's premium to NAV valuation and its equity and debt-funded bitcoin acquisition program in general.
However, analysts at research and brokerage firm Bernstein believe this can continue for a long time. “As MicroStrategy buys more bitcoin, the valuation premium normalises, with bitcoin stock (denominator) going up,” the analysts led by Gautam Chhugani noted last week. “At 18% leverage levels (convertible debt to bitcoin NAV), MSTR has the room to issue more debt, apart from tapping its equity ATM. And if bitcoin’s price remains range bound around the $100K levels, we expect MicroStrategy to maintain its trajectory of bitcoin buying.”
MicroStrategy uses a key performance indicator it calls “Bitcoin Yield” to measure the percentage change in its bitcoin holdings relative to its diluted shares. As of Dec. 15, the firm’s year-to-date Bitcoin Yield is 72.4%, reflecting significant growth in holdings while balancing share dilution amid the company’s strategy of acquiring bitcoin efficiently to benefit shareholders.
MicroStrategy shares closed up 4.2% at $408.67 on Friday, having gained over 490% year-to-date, according to TradingView. The stock is currently up 3.5% in pre-market trading on Monday.
MSTR/USD price chart. Image: TradingView.
MicroStrategy enters the Nasdaq 100 index, sights set on S&P 500
On Friday, it was announced that MicroStrategy will join the Nasdaq 100 index on Dec. 23. Its inclusion also means that several large exchange-traded funds will then buy the stock, including the popularly-traded QQQ, with Bloomberg analyst James Seyffart estimating net buying of at least $2.1 billion in shares.
MicroStrategy will be the 40th largest company in Nasdaq100, equivalent to 47 bps weight in the index, the Bernstein analysts wrote in a note to clients on Monday, further improving MSTR’s market liquidity and expanding the firm’s capital flywheel effect and bitcoin buying program.
“With the likely bump from Nasdaq100 inclusion, it is likely that MSTR continues to sell its stock at current elevated levels, to buy more bitcoin,” the Bernstein analysts said. “If you are not a bitcoin believer, this is scary, but MSTR’s bitcoin strategy is a long term high-conviction ‘buy & hold’ strategy — with the view to hold bitcoin till it surpasses gold and beyond (effectively > $1 million/bitcoin price).”
“Given the strong underlying bitcoin market performance, the capital markets today are hungry for bitcoin exposure — both equity and convertible debt markets,” they added. “We expect MSTR to explore other long term issuances such as preference shares to further scale its balance sheet.”
Following MicroStrategy’s inclusion in the Nasdaq 100 and QQQ, Bernstein also expects more visibility and recognition, with the market setting its sights on S&P 500 inclusion in 2025.
Joining the S&P 500 is more challenging due to the firm’s software business’ lack of profit. However, a recent accounting rule change for bitcoin valuations could make the firm eligible next year. “As a new mark to market, FASB goes live in 2025, MicroStrategy would be able to recognize its unrealized gains on its bitcoin position, improving its S&P prospects,” the Bernstein analysts explained.
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