MicroStrategy, Inc. MSTR late Friday filed a Form 8-K with the SEC regarding an agreement with Cowen & Co. for the sale of up to $500 million worth of its Class A stock.
What Happened: The company also filed a prospectus supplement with the SEC in connection with the offering under its existing automatic shelf-registration statement, which became effective on June 14.
If the proposed sales come to fruition, the company’s outstanding shares will increase to up to 11.47 million. The company said it intends to use the net proceeds from the offering for general corporate purposes, including the acquisition of Bitcoin BTC/USD.
Reacting to the announcement, MicroStrategy shares fell 1.44% to $258.20 in after-hours trading on Friday, according to Benzinga Pro data.
Why It’s Important: MicroStrategy’s primary business is its enterprise analytics platform, but it is known more for its decision to adopt Bitcoin as its primary treasury reserve asset.
In the second-quarter earnings presentation, the Michael Saylor-led company said it has 129,699 bitcoins acquired at an average price of $30,664 per bitcoin, net of fees. At last check, Bitcoin was trading 1.20% higher at $21,269.14, which is at a discount to MicroStrategy’s purchase price.
Bitcoin, along with other cryptocurrencies, has come under significant selling pressure amid the financial market downturn seen since the start of the year. The downturn in the crypto market started even earlier, as most cryptos peaked in early November 2021.
MicroStrategy had to record a non-cash digital impairment charge of $917.8 million in the second quarter because of the crypto winter.
On its Bitcoin bet, MicroStrategy said it is still the early days of Bitcoin, and it currently accounts for a very small fraction of global assets. The company suggested that it has a long-term horizon as far as the apex crypto is concerned.
“We do not plan to engage in regular trading of bitcoin and have not hedged or otherwise entered into derivative contracts with respect to our bitcoin holdings, though we may sell bitcoin in future periods as needed to generate cash for treasury management and other general corporate purposes,” the company said in the filing.
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