Michael Saylor’s Fundraising Success

Michael Saylor announced that his company upsized its fundraising deal from $500 million to $722.5 million. To finalize this, he increased the STRF preferred stock dividend and altered the financial terms without mentioning these specifics in his tweet.

Specifically, Strategy (formerly MicroStrategy) aimed to sell 5 million STRF preferred stock shares close to their $100 liquidation preference. However, the company reduced the share price by 15% to $85.

Liquidation preference allows certain investors to recoup their investments before common shareholders during liquidity events like dividends or payouts.

In addition to the 15% discount on liquidation preference, Strategy confirmed a 10% dividend rate on the full $100 per share. This effectively provides investors a de facto 11.76% dividend rate due to the lower purchase price.

Moreover, the liquidation preference for STRF shareholders starts at $100, with potential for increases based on future sales or price trends on Nasdaq.

An Upsized Round Because of Upsized Generosity

Net proceeds for Strategy from this offering are approximately $711.2 million, significantly surpassing the initial $500 million goal. This increase hinges on better deal terms: greater preference in the capital structure and a more favorable dividend rate.

The funds generated from this preferred stock sale will primarily be used to purchase more bitcoin (BTC).

Read more: Michael Saylor’s bitcoin announcements no longer seem to pump MSTR stock

Reactions to the announcement have varied. While some view it as bullish for the company and BTC prices, critics like Peter Schiff mocked the decision, raising questions about who might be adversely affected if BTC’s bear market continues. Critics have ammunition, especially as Strategy experiences a multi-month bear market and struggles with its recent bitcoin purchases. MSTR shares have dropped 44% since their all-time high in November.