MicroStrategy’s Top 100 Breakthrough Fueled by Bitcoin

MicroStrategy (MSTR), a company closely linked to Bitcoin’s journey, has achieved a significant milestone. As of the November 20 trading session, it has surged 48 places in two days, securing the 85th spot among the top 100 publicly traded U.S. companies by market cap.

MicroStrategy Joins the Top 100 Club

As of November 20, MSTR’s market cap has climbed to nearly $111 billion following a 12% surge in its stock price on November 19, coupled with an additional 15% gain as of this writing. Currently, the stock is trading at $482 per share, marking a remarkable close to an already explosive year of growth. Concurrently, Bitcoin has soared to a new all-time high, breaking $94,000 and trading at $94,850 as of November 20.

For context, MicroStrategy’s stock has skyrocketed 620% year-to-date in 2024, while BTC itself is up over 125%. Since adopting Bitcoin as a treasury asset in 2020, MicroStrategy’s stock has soared an astonishing 2,739%, narrowly surpassing NVIDIA’s 2,688% gain over the same period. This feat places MSTR ahead of NVDA when comparing performance over the last five years.

How MicroStrategy Became Bitcoin’s Biggest Backer

MicroStrategy has redefined its identity, evolving from a business software company to a leader in corporate Bitcoin adoption. Its strategy is straightforward: accumulate as much Bitcoin as possible and leverage it as a long-term asset. Since its first purchase in 2020, MicroStrategy has continued to expand its Bitcoin reserves through bold acquisitions and innovative funding methods.

As of November 20, the company holds approximately 331,200 BTC, acquired at a total cost of $16.5 billion, or an average price of $49,874 per Bitcoin. During the current bull run, the company purchased 51,780 BTC for $4.6 billion between November 11 and November 17, at an average price of $88,627 per Bitcoin. MSTR’s BTC holdings, now valued at over $31 billion, are more than 10 times the Bitcoin holdings of Marathon Digital (MARA) and far exceed Tesla’s 11,500 BTC.

To fund its acquisitions, MicroStrategy relies heavily on capital-raising strategies. On November 18, the company disclosed that it sold approximately 13.6 million shares for net proceeds of $4.6 billion under a pre-existing agreement. It still has $15.3 billion in shares available for future issuance, giving it significant flexibility for continued investment in Bitcoin. Additionally, MicroStrategy unveiled a $1.75 billion convertible senior note, set to mature in December 2029, with a 0% coupon rate.

In a new twist, MicroStrategy announced that due to high demand, it had upsized the convertible bond offering from $1.75 billion to $2.6 billion, including a $400 million greenshoe option, with a 55% conversion premium. The greenshoe option allows underwriters to sell additional bonds beyond the initial offering. The 55% conversion premium represents the percentage above MicroStrategy’s current stock price at which the bonds can be converted into shares.

“Given high demand, we upsized our $MSTR offering of 0% convertible bonds due 2029 from $1.75 billion to $2.6 billion, including a $400 million greenshoe option, and priced it at a 55% conversion premium.” — Michael Saylor, November 20, 2024

A Vision Beyond Bitcoin Holdings

MicroStrategy’s story is far from finished, and its next chapter is shaping up to be even more audacious. Led by Executive Chairman Michael Saylor, MicroStrategy aims to advocate for Bitcoin adoption across the broader corporate world. On November 19, Saylor confirmed that he would deliver a three-minute presentation to Microsoft’s board of directors to advocate for the adoption of BTC as part of their investment strategy.

Saylor argues that holding Bitcoin as a tangible asset could help companies stabilize their stock value, particularly compared to relying heavily on quarterly earnings performance. For instance, Microsoft’s enterprise value is currently tied to 98.5% of its earnings, with only a small fraction supported by tangible assets. Saylor believes BTC could offer a more balanced approach, potentially preserving shareholder value over the long term.

Beyond influencing others, MicroStrategy is doubling down on its own Bitcoin strategy with a bold initiative called the “21/21 Plan.” Announced in late October, this ambitious plan aims to raise $42 billion over the next three years—$21 billion through equity and another $21 billion through debt. The goal is to buy more BTC and solidify its position as the world’s leading Bitcoin treasury company.

The Bitcoin-MSTR Feedback Loop

MicroStrategy’s strategy has created a fascinating feedback loop that ties its performance directly to Bitcoin’s trajectory, amplifying both assets in the process. The more Bitcoin MicroStrategy buys, the tighter the circulating supply becomes, pushing Bitcoin’s price higher, especially in bullish markets. The company’s stock, fueled by the rising value of its Bitcoin holdings, attracts further investor interest, boosting its price.

A higher stock price allows MicroStrategy to raise more capital through share sales or debt, and that capital is channeled into buying even more Bitcoin. It’s a cycle that feeds on itself, and while it’s proven highly effective so far, it also raises important questions about its sustainability.

“The higher the price of $MSTR stock, the more shares Saylor can sell. The more shares he sells, the more Bitcoin he can buy. The more Bitcoin he buys, the higher the Bitcoin price rises. When the price of Bitcoin goes up, the share price of MSTR goes up more. When does it end?” — Peter Schiff, November 19, 2024

MicroStrategy now controls over 1% of Bitcoin’s total supply, giving it significant influence on the market. If MicroStrategy’s strategy succeeds, it could encourage other companies to follow suit, amplifying the cycle further. However, if Bitcoin’s price falters, the entire mechanism could unwind, with both the stock and Bitcoin suffering as a result.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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