MicroStrategy launches new preferred stock offering

MicroStrategy Incorporated (NASDAQ:MSTR), a finance services company with a market capitalization of $84.5 billion, announced on Wednesday the issuance of 7.3 million shares of a new preferred stock class, 8.00% Series A Perpetual Strike Preferred Stock, through a public offering. According to InvestingPro data, the company currently operates with a moderate level of debt and has shown remarkable market performance, delivering a 610% return over the past year. The move, recorded on February 5, 2025, involved filing a Certificate of Designations with the Delaware Secretary of State, which outlines the terms for the new stock class.

The preferred stock, with a par value of $0.001 and a $100 liquidation preference per share, is senior to both class A and class B common stock in terms of dividends and asset distribution upon liquidation. Regular Dividends will accumulate at an annual rate of 8.00% on the liquidation preference, payable quarterly starting March 31, 2025. This move comes as InvestingPro analysis shows the company’s current ratio at 0.65, indicating that short-term obligations exceed liquid assets - a factor that may have influenced this financing decision. Strategy may pay these dividends in cash, class A common stock, or a combination thereof.

Holders of the new preferred stock will have conversion rights into class A common stock, with an initial rate of 0.1000 shares of class A common stock per share of preferred stock, equivalent to an initial conversion price of $1,000.00 per share of class A common stock. This rate is subject to customary anti-dilution adjustments.

MicroStrategy reserves the right to redeem all issued perpetual strike preferred stock under certain conditions, including if the outstanding liquidation preference falls below 25% of the total issued or if a "Tax Event" occurs. Redemption prices will be in cash, including accumulated unpaid Regular Dividends up to the redemption date.

In the event of a "Fundamental Change," as defined in the Certificate of Designations, preferred stockholders can compel Strategy to repurchase their shares at the liquidation preference plus any accumulated and unpaid Regular Dividends.

The new preferred stock also comes with voting rights on specific corporate matters, but not on an as-converted basis with class A common stockholders. If Strategy fails to pay four or more consecutive dividends, the preferred stockholders, along with any other voting parity stock, may elect one director to Strategy’s board.

This summary is based on the Certificate of Designations and the form of the certificate representing the perpetual strike preferred stock filed with the SEC. With a Price/Book ratio of 22.5x and significant price volatility, investors seeking deeper insights into MicroStrategy’s financial position can access comprehensive analysis through InvestingPro, which offers 14 additional exclusive ProTips and detailed valuation metrics for informed decision-making.

In other recent news, MicroStrategy Incorporated, now known as Strategy, reported Q4 2024 financial results that did not meet analyst expectations, with revenues falling and losses widening. The company’s revenue for the quarter was $120.7 million, falling short of the analyst consensus estimate of $123 million. Strategy also posted a significantly larger loss per share of -$3.20 compared to the -$0.12 loss per share that analysts had anticipated.

Despite these developments, Strategy emphasized its ongoing acquisition of bitcoin, securing 218,887 bitcoins for $20.5 billion in Q4, its most significant quarterly increase in bitcoin holdings to date. As of December 31, 2024, Strategy held approximately 447,470 bitcoins valued at $41.789 billion.

President and CEO of Strategy, Phong Le, stated that the company had completed $20 billion of its $42 billion capital plan, significantly ahead of its initial timelines. Strategy also announced plans to adopt fair value accounting for its bitcoin holdings starting in Q1 2025.

Finally, Strategy raised additional funds through various offerings, including $15.1 billion from its at-the-market equity program in Q4 and $3 billion from convertible notes issued in November. Despite disappointing core business results, Strategy continues to prioritize its bitcoin accumulation strategy as a primary value driver.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.