After joining the Nasdaq 100 on December 23, 2024, MicroStrategy, the world’s largest corporate Bitcoin holder, is doubling down on its commitment to Bitcoin. The company has unveiled a proposal to significantly increase its authorized shares, a strategic move to support its ambitious Bitcoin acquisition plans.
Authorized shares define the maximum number of shares a company can issue, as outlined in its corporate charter. While not all authorized shares are immediately issued, they serve as a reserve for future needs, such as raising capital or issuing stock-based rewards.
Proposed Expansion of Authorized Shares
MicroStrategy has submitted a filing with the Securities and Exchange Commission (SEC) to increase:
- Class A common shares from 330 million to 10.33 billion.
- Preferred shares from 5 million to 1.005 billion.
This increase lays the groundwork for MicroStrategy to raise substantial capital, bolstering its strategy of acquiring Bitcoin as part of its long-term financial model.
Understanding Class A Common Shares and Preferred Shares
Class A Common Shares:
These represent the company’s ordinary equity, granting holders voting rights in corporate decisions, such as board elections. For MicroStrategy, expanding Class A shares provides flexibility to raise capital by issuing new shares in public markets.
Preferred Shares:
Preferred shares are a form of equity that offers special rights, such as priority in dividend payouts and asset claims in case of liquidation. Although they may not carry voting rights, they appeal to conservative investors seeking steady returns and reduced risk.
The “21/21” Initiative: A Three-Year Vision
MicroStrategy’s proposal aligns with its “21/21” strategy, a bold three-year plan to raise $42 billion to solidify its position as the leading Bitcoin Treasury Company.
- $21 billion via equity issuance: Leveraging the expanded Class A and preferred shares.
- $21 billion through fixed-income instruments: Including debt issuance, convertible bonds, and additional preferred stock.
The entirety of these funds will be allocated to purchasing Bitcoin, further entrenching MicroStrategy’s identity as a Bitcoin-centric treasury management firm.
Michael Saylor, co-founder and executive chairman of MicroStrategy, emphasized the significance of this initiative:
“These proposals mark a new chapter in our evolution as a Bitcoin Treasury Company, reflecting our ambitions for the future.”
MicroStrategy’s Growing Bitcoin Treasury
MicroStrategy continues to expand its Bitcoin reserves aggressively:
- This week alone, it purchased 5,262 BTC for $561 million, increasing its total holdings to 444,262 BTC valued at over $41.6 billion.
Despite this impressive growth, the company’s stock experienced short-term volatility:
- Shares fell 8.78% on Monday to $332.23, representing a 17.6% decline over the past month.
- On a yearly basis, however, the stock has surged by 450%, driven by its Bitcoin-focused strategy.
Nasdaq 100 Inclusion: A Major Milestone
On December 23, 2024, MicroStrategy achieved a significant milestone by being included in the Nasdaq 100 Index, which features the 100 largest non-financial companies listed on Nasdaq by market capitalization.
This inclusion highlights:
- MicroStrategy’s growing relevance in the tech sector.
- The substantial value increase of its stock, largely driven by its Bitcoin-centric strategy.
Investors now gain indirect exposure to Bitcoin through MicroStrategy’s stock, as well as through the Invesco QQQ Trust ETF (QQQ), which tracks the Nasdaq 100.
MicroStrategy and the Strategic Bitcoin Reserve
Saylor has expressed strong support for President-elect Donald Trump’s proposal to establish a U.S. Strategic Bitcoin Reserve, outlined in the “Digital Assets Framework.”
This initiative underscores the growing acknowledgment of Bitcoin as a strategic asset at both corporate and national levels. MicroStrategy’s leadership in Bitcoin adoption positions it as a pivotal player in this evolving narrative, blending corporate innovation with broader financial and technological trends.
Looking Ahead: A Transformative Strategy
MicroStrategy’s intensified focus on Bitcoin represents a paradigm shift in corporate treasury management. With an ambitious fundraising plan, record-breaking Bitcoin acquisitions, and its inclusion in the Nasdaq 100, the company is setting a new benchmark for institutional Bitcoin adoption.
The “21/21” initiative, coupled with strategic market moves, positions MicroStrategy as a trailblazer in the intersection of traditional finance and digital assets. As the company continues to lead by example, 2024 may well be remembered as the year MicroStrategy transformed the relationship between corporations and cryptocurrency.