MicroStrategy (MSTR) Shares Plunge 25% Despite Completing $3B Bitcoin (BTC) Offering

The drop came despite the completion of the offering, which marked a significant milestone in the company's ongoing Bitcoin acquisition strategy.

Business intelligence firm MicroStrategy (NASDAQ:MSTR) has completed a secondary offering of $3 billion in 0% convertible senior notes, marking a significant step in its ongoing strategy to ramp up Bitcoin (CRYPTO:BTC) acquisitions.

The offering, which began on November 18 with a target of $1.75 billion, saw strong demand, leading to two upsizes to finally reach the $3 billion mark.

The notes carry a 55% premium, translating to an implied strike price of roughly $672. Bondholders are granted the option to convert their notes into MicroStrategy class A common stock at this predetermined price.

If the notes are not converted before maturity, they will be redeemed at face value. Notably, these notes do not pay regular interest, unlike traditional debt instruments.

However, they hold “senior” status, which grants bondholders priority over common stockholders in case of bankruptcy or liquidation.

Bitcoin僚友を目指すマイクロストラテジー、0%転換債30億ドルを発行へ

If MicroStrategy allocates the full $3 billion raised from the offering to Bitcoin purchases, it could acquire approximately 30,600 BTC, based on current prices.

This move would further solidify MicroStrategy's position as the public company with the largest Bitcoin holdings.

As of the latest available data, MicroStrategy holds 331,200 BTC, valued at over $32.7 billion, according to the Saylor Tracker, named after Executive Chairman Michael Saylor.

This immense reserve places MicroStrategy well ahead of other public companies in Bitcoin holdings.

Cirtron reveals hedged short on MSTR stock after 'record' volume day

Following the offering announcement, MicroStrategy shares experienced a significant dip.

Among those reacting to the move was Cirtron Research, which revealed a hedged short position on the stock.

The firm argued that MSTR shares had become “overheated,” and their volume was “completely detached from Bitcoin fundamentals.”

"We are short MSTR in a hedged manner and believe the stock will continue to trade lower as the dust settles on the new capital raise and the market realizes that MSTR is a low-quality way to gain exposure to BTC,” Cirtron said in a note.

"After a record volume day yesterday, MSTR is up another 10% premarket, while Bitcoin is trading flat,” the firm added.

"This detachment from Bitcoin fundamentals is unsustainable, and we believe MSTR will ultimately follow the path of other low-quality 'Bitcoin僚友' stocks."

Despite the volatility and Cirtron's bearish view, MSTR remains one of the top-performing U.S. stocks of 2024, with a year-to-date gain of 480%.

On November 20, it was the second most-traded stock in the U.S., as investors grappled with the pros and cons of gaining Bitcoin exposure through MicroStrategy.

The firm also played a key role in driving record trading volumes in the “Bitcoin Industrial Complex” on November 21.

The complex, which includes U.S. spot Bitcoin ETFs and Bitcoin-related equities like Coinbase (NYSE:COIN) and MSTR, generated an unprecedented $70 billion in trading activity.

Bitcoin price closes in on $100K as MicroStrategy completes $3B secondary offeringBitcoin is currently trading at $99,423 — just shy of the $100,000 mark, according to Brave New Coin data.

The cryptocurrency has experienced a stellar run in 2024, surging over 85% year-to-date and hitting new all-time highs along the way.

As Bitcoin approaches this pivotal price point, traders and investors are keeping a close eye on the markets, eagerly awaiting the next chapter in Bitcoin's remarkable journey.