Shares of MicroStrategy (NASDAQ:MSTR) are down in today’s trading after the crypto-crazed software company announced that it plans to let qualified institutional buyers purchase $500 million worth of unsecured convertible senior notes due in 2032. Unsurprisingly, the money raised from selling these notes will be used to buy more Bitcoin (BTC-USD), adding to the 214,400 BTC that MicroStrategy already has. The money will also be used for other corporate needs.
MicroStrategy to Redeem 0.750% Convertible Senior Notes Due in 2025
Separately, MicroStrategy announced that it plans to fully redeem its 0.750% Convertible Senior Notes due in 2025, worth $650 million, on July 15, 2024. This means it will buy back the notes for their full value plus any interest owed up to that date unless the notes are converted into stock before that date.
Noteholders can choose to convert their notes into MicroStrategy’s class A common stock at a rate of 2.5126 shares for every $1,000 of notes until 5:00 p.m. on July 11, 2024. This equates to a conversion price of $397.99 per share. If they do, MicroStrategy will give them shares and cash for any partial shares.
Given that the current stock price is above $1,500, it’s likely that a large portion of noteholders will opt to convert their holdings into shares. This would allow the company to grow its cash pile with the new offering mentioned above in order to invest in Bitcoin.
Is MSTR Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSTR stock based on four Buys assigned in the past three months, as indicated by the graphic below. After a 436% rally in its share price over the past year, the average MSTR price target of $1,793 per share implies 18.19% upside potential.
