MicroStrategy filed an S-3 for the U.S. Securities and Exchange Commission, stating that it would be launching an “at the market” securities offering which would allow it to sell up to $1 billion of its Class A Common stock over time.
The firm stated, “We intend to use the net proceeds from the sale of any class A common stock offered under this prospectus for general corporate purposes, including the acquisition of bitcoin, unless otherwise indicated in the applicable prospectus supplement.”
The company went further to add that, “We have not determined the amount of net proceeds to be used specifically for any particular purpose. As a result, management will retain broad discretion over the allocation of the net proceeds of any offering.”
The firm will now have raised approximately $900 million in which so far has gone to the purchase of Bitcoin. As stated above, the additional $1 billion it intends to raise has not ruled out the possibility of using the proceed to buy even more Bitcoin.
The filing also stated, “Bitcoin does not pay interest or other returns and so ability to generate a return on investment from the net proceeds from this offering will depend on whether there is appreciation in the value of Bitcoin following our purchases of Bitcoin with the net proceeds from this offering. Future fluctuations in Bitcoin trading prices may result in our converting Bitcoin purchased with the net proceeds from this offering into cash with a value substantially below the net proceeds from this offering.”
What this means
Nairametrics earlier reported that the company completed the issuance of the senior bond that gave the company net proceeds of $488 million to acquire bitcoin. Now the firm is looking to raise an additional $1 billion through the sale of common stock and is not ruling out the possibility of using all or parts of the proceeds to acquire more Bitcoin.
What you should know
CEO Michael Saylor appears to be going all-in on Bitcoin and cryptocurrencies as a whole. Investors should however exercise caution as the filing also stated that, “Our bitcoin holdings could subject us to regulatory scrutiny”, which was written under the forward-looking statement of the filing.
MicroStrategy closed just shy of $600 to end the day at $598.49, gaining approximately 16% yesterday. Bitcoin is trading $40,350, up 3% for the day, as of the time of writing this report.
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