MicroStrategy Is Pioneering Bitcoin Capital Markets, Bernstein Says

MicroStrategy
(MSTR)
is
not
just
a
software
firm
diversifying
its
corporate
treasury
into
cryptocurrency,
it
is
pioneering
bitcoin

(BTC)
capital
markets,
broker
Bernstein
said
in
a
research
report
on
Tuesday.

“MSTR
is
the
only
corporate
that
has
developed
institutional
demand
for
bitcoin
linked
convertibles,”
analysts
Gautam
Chhugani
and
Mahika
Sapra
wrote.

The
broker
notes
that
to
date
MicroStrategy
has
raised
$4
billion
of
convertible
debt
for
the
solpurpose
of
buying
more
bitcoin.
A

convertible
bond
is
a
type
of
debt
security
that
can
be
converted
into
shares.
Michael
Saylor’s
firm
currently
holds
214,400
bitcoin
worth
about
$14.5
billion.
It
started
buying
the
cryptocurrency
as
a
reserve
asset
in
2020.
“No
other
corporate
has
an
active
bitcoin
investing
strategy
that
can
attract
capital
at
scale,”
the
authors
wrote.

MicroStrategy’s
long-term
convertible
debt
strategy
means
it
has
enough
time
to
benefit
from
potential
bitcoin
upside
with
limited
liquidation
risk
to
the
crypto
on
its
balance
sheet,
the
note
said.

When
bitcoin
rises
the
Virginia-based
company
has
more
room
to
issue
new
debt,
conversely
when
the
crypto
falls
and
leverage
rises,
the
firm
can
issue
new
shares
to
cut
leverage,
Bernstein
noted.

This
use
of
both
equity
and
debt
has
seen
MicroStrategy
grow
its
bitcoin
per
equity
share
nearly
67%
in
the
last
four
years,
the
report
said.

Bernstein
notes
that
MicroStrategy
has
not
sold
any
bitcoin
since
it
started
buying
the
crypto
in
2020,
and
it
expects
the
company
to
continue
to
raise
capital
to
add
to
its
stash.

The
broker
has
an
outperform
rating
on
MicroStrategy
stock
with
a
$2,890
price
target.
The
shares
erased
a
drop
of
as
much
as
2.5%
to
trade
little
changed
around
$1,509.

Read
more:



Bitcoin
Could
Hit
$1M
Within
10
Years,
Bernstein
Says
as
it
Initiates
Coverage
of
MicroStrategy

UPDATE
(June
18,
14:42
UTC):

Updates
share
price
reaction
in
last
paragraph.