MicroStrategy (MSTR, Financial), the world's largest corporate holder of Bitcoin, saw its stock price jump 11.2% to $427.96 per share, driven by Bitcoin's strong performance. Since the U.S. presidential election, the company's stock has nearly doubled, with a sevenfold increase this year. Bitcoin's price hit a new high, rising 2.8% to approach $94,000, as investors view former President Trump's policies as favorable to cryptocurrencies. Since the election, Bitcoin has surged about 35%.
MicroStrategy's market capitalization is $96 billion based on basic shares. However, using the latest diluted share count of 256.3 million, its market cap reaches $110 billion, making it one of the largest U.S. companies not in the S&P 500. Investors are drawn to MicroStrategy's aggressive Bitcoin acquisition strategy and its use of financial leverage.
The company announced a $1.75 billion zero-coupon convertible bond offering, which will increase its total debt to around $6 billion. Since October 31, MicroStrategy has raised approximately $6.6 billion through stock sales, including $4.6 billion from November 11 to 17, all used to purchase Bitcoin. As of November 17, the company holds 331,200 Bitcoins, over 1.5% of Bitcoin's total supply of about 20 million.
Investors are paying a significant premium for MicroStrategy's Bitcoin holdings, with the stock's premium exceeding the value of its Bitcoin holdings by more than three times. The Bitcoin holdings are valued at approximately $31 billion.
Chairman and major shareholder Michael Saylor introduced the "21-21" strategy, planning to issue $21 billion in stocks and bonds over the next three years to buy Bitcoin. Recent equity and bond sales indicate the company is steadily achieving this goal. Saylor emphasized the company's strategy of embracing volatility and investing in assets that outperform the S&P 500, aiming to strengthen the company and deliver greater returns to shareholders.
However, the high premium carries risks. Economist Peter Schiff questioned the sustainability of this cycle, suggesting that as MSTR stock rises, Saylor can sell more shares to buy Bitcoin, thus inflating both Bitcoin's price and MSTR's stock price further. Currently, investors effectively pay about $300,000 per Bitcoin via MicroStrategy, far above the current market price, indicating potential underperformance of MSTR stock if the premium narrows.
