Recent SEC filing reveals that MicroStrategy to reinvest $500M stock sales into Bitcoin

Despite Saylor's stepping down as the chairman of the company, MicroStrategy pursues his dream to acquire more BTC by selling company stocks

By Shashank Bhardwaj

Image: Shutterstock

MicroStrategy (MSTR) intends to sell up to $500 million in stock. The sale is expected to take place to fund additional crypto asset purchases. MicroStrategy is the largest institutional buyer of Bitcoin (BTC). It agreed to sell its aggregated class A common stock through two agents, Cowen and Company and BTIG. The company stated that the net proceeds from the sale would be used for 'general corporate activities.' It includes the purchase of Bitcoin. MicroStrategy filed this with the US Securities and Exchange Commission on Friday (SEC).

Michael Saylor, the former chairman of the software development firm, is a Bitcoin bull. Despite the significant drop in Bitcoin prices, he previously stated that he would not sell the company's Bitcoin holdings. Over the course of several years, MicroStrategy amassed approximately 129,699 BTC for a total purchase price of $3.977 billion. The recent filing shows that the business analytics software firm is still pursuing its goal of acquiring more BTC by selling company stock. According to the filing,

"We intend to use the net proceeds from the sale of any class A common stock offered under this prospectus for general corporate purposes, including the acquisition of bitcoin, unless otherwise indicated in the applicable prospectus supplement."

MicroStrategy's stock rose 12 percent on Friday. This occurred as Bitcoin increased by nearly 10 percent. However, following the announcement of the stock offering, the stock fell about 1.5 percent in after-hours trading. This incident is expected to reduce the value of existing shares. Buying the dip is critical for MicroS strategy. This is due to the reason that the company's BTC reserve has dropped to nearly $2.8 billion. This resulted in a loss of more than $1 billion.

The District of Columbia recently sued Saylor and MicroStrategy for allegedly evading taxes on Saylor's earnings in the district. MicroStrategy's chief financial officer, Andrew Kang, previously stated during an earnings call that the company has approximately 85,000 bitcoins that have not been pledged as collateral. It is supposed to provide more than enough to cover the ongoing needs of its Silvergate term loan in the event of 'any expected market volatility.'

From the standpoint of the company, this filing comes at an interesting time. Rumours were circulated that the firm had begun dumping its bitcoins after Michael Saylor stepped down as CEO. After that, MicroStrategy assured that it would continue to accumulate BTC. However, it has not done so officially yet.

Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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