Strategy (MSTR), the crypto-crazed data analytics firm, announced that it plans to issue up to $21 billion in preferred stock in order to purchase more Bitcoin. This move is part of Strategy’s goal to continue accumulating tens of billions of dollars worth of the cryptocurrency over the next few years. It is worth noting that the company already has a massive hoard that now totals approximately 499,096 Bitcoin that are valued at around $42 billion.
The company has recently shifted its strategy to use equity and share sales to fund its Bitcoin purchases. In fact, the company had previously been relying on convertible debt to raise money as hedge funds looked for safer ways to capitalize on the company’s volatility, which tends to magnify the already-wild performance of Bitcoin. Preferred stock is another strategy for investors to reduce their risk, as it basically acts like a bond but pays dividends instead of interest.
Interestingly, Strategy’s announcement comes after President Donald Trump’s recent executive order to establish a strategic U.S. Bitcoin reserve, which authorizes the Treasury and Commerce departments to develop “budget-neutral strategies” strategies for buying more Bitcoin without adding extra costs to taxpayers.
Is MSTR a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSTR stock based on 11 Buys assigned in the past three months, as indicated by the graphic below. After a 60% rally in its share price over the past year, the average MSTR price target of $548.91 per share implies 131% upside potential.
