MicroStrategy Stock Slides As Bitcoin-Fueled Equity Plan Raises Dilution Concerns Among Retail Investors

Shares of MicroStrategy were down over 4% early on Thursday after the Michael Saylor-owned business intelligence firm said it wants to issue more shares, in order to buy more Bitcoin. 

Saylor, currently MicroStrategy’s executive chairman in charge of its Bitcoin strategy, even announced a Bitcoin “gift” of $299 million to the company’s shareholders in a post on X (formerly known as Twitter) to showcase the upside of having the digital currency as a treasury asset – but retail sentiment on Stocktwits continued to be ‘bearish’. 
 

Michael Saylor's Post On X (Formerly Known As Twitter) With A Bitcoin 'Gift' For MSTR Investors. | Source: @saylor/X

The company’s Dec. 23 preliminary proxy filing with the Securities and Exchange Commission (SEC) seeks approval to increase the authorized number of the company’s class A common shares outstanding to 10.33 billion from the current 330 million.

That would be enough stock at the current share price to purchase all of the world’s Bitcoin — nearly 20 million coins — at the current Bitcoin price of around $95,100, according to Barron’s. 

The company has been on an equity-issuance spree since late October, when it announced plans to sell $21 billion worth of stock and a similar amount of bonds to buy Bitcoin through 2026 during its third-quarter earnings call. 

The company noted in the filing that it has been executing on that plan “significantly faster than originally anticipated.”

MicroStrategy Sentiment and Message Volume on Dec 26 as of 10:15 a.m. ET | Source: Stocktwits

Retail sentiment on Stocktwits slipped to ‘bearish’ from ‘neutral’ a day ago, while chatter remained at ‘low’ levels. 

Most users debated concerns over dilution and risk in tying the company’s fortunes so closely to Bitcoin.

As of now, Microstrategy is the largest corporate holder of Bitcoin with 444,262 BTC in its coffers, valued at roughly $27.7 billion bought at $62,257 per BTC on average.

This is after the company announced on Monday that it had purchased an additional $561 million of the digital token at an average price near last week’s record high. That marked the seventh week in a row of purchases.

While Bitcoin’s 135% surge this year has boosted returns for the company, critics argue the equity-driven acquisition strategy exposes shareholders to high volatility. 

BTC’s price has fallen over 2.5% in the last 24 hours, trading at around $95,000, at last check.

Meanwhile, MicroStrategy’s shares have risen over 400% year-to-date, benefiting from Bitcoin’s rally.

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