MicroStrategy, under the leadership of Executive Chairman Michael Saylor, is continuing its aggressive strategy of acquiring bitcoin (BTC) with a new capital raise plan involving perpetual preferred stock. This decision was outlined during an investor meeting at the ICR conference in Orlando, where Saylor discussed how the company intends to raise $2 billion through the sale of perpetual preferred stock, a new financial instrument for the firm.

The perpetual preferred stock differs from previous funding methods, such as cash on hand, at-the-market (ATM) offerings, and convertible bonds. Unlike convertible bonds that come with a set maturity date, perpetual preferred stock has no fixed maturity, providing the company with more flexible, long-term funding. It offers fixed dividend payments to shareholders, but without voting rights, and can be redeemed by the company at a later date.

MicroStrategy sees the advantage of perpetual preferred stock in its extended duration, compared to the shorter duration of convertible bonds, which have a tenor of four to eight years. This allows the company to benefit from stable, low-volatility financing that can be more attractive to large institutional investors such as pension funds and banks, who seek stable returns from fixed dividend payouts.

The anticipated mid-single-digit yield on the perpetual preferred stock is expected to provide the company with lower volatility than convertible bonds, offering a safer option for investors. MicroStrategy has also continued to bolster its bitcoin holdings, with the company purchasing an additional 2,530 BTC in the latest acquisition, bringing its total holdings to 450,000 BTC.

The company’s offering is expected to be finalized in the first quarter of 2025, with terms likely including dividends, the ability for shares to convert into common stock, and provisions for share redemption. As of now, Benchmark has maintained its buy rating for MicroStrategy with a price target of $650 per share, signaling confidence in the company’s long-term growth and commitment to its bitcoin strategy.

MicroStrategy’s Special Meeting for Shareholders is scheduled for January 21, 2025, where investors will vote on the potential increase of class A common stock and preferred stock. The company’s Q4 earnings call is also set for February 4, 2025.