MicroStrategy stock soars 14% on convertible-bond offering increase

Investing.com -- MicroStrategy Incorporated (NASDAQ:MSTR) shares surged more than 14% ahead of Thursday market open after the company raised its planned convertible bond offering to $2.6 billion, up from the initial target of $1.75 billion, signaling more bitcoin purchases ahead for the company.

The company, which holds the largest corporate stash of Bitcoin, has seen its share price soar rapidly recently as Bitcoin continues to hit new highs. Investors have increasingly valued MicroStrategy’s bitcoin reserves, which reached 331,200 coins as of November 17.

Between October 31 and November 17, MicroStrategy acquired approximately $6.6 billion worth of Bitcoin, funded by fresh stock sales.

Bitcoin, meanwhile, is extending its postelection rally, climbing 36% during the period, including a more than 3% gain on Thursday to climb above $97,000. Market optimism is growing, with bulls eyeing a potential breakthrough past $100,000.

The new convertible bond was priced with a 0% interest rate, matching the lowest levels for such offerings this year. It carries a conversion premium of 55% above the composite price of MicroStrategy’s stock during trading on Tuesday afternoon, making it one of the year’s largest premiums on a new convertible bond.

The deal also includes an option for an additional $400 million if initial buyers choose to expand their purchase.

“The volatility in MSTR's stock is presenting the company with attractive capital raising opportunities as seen with the proposed $2.6bn 0% convertible offering, and we think management has done an exceptional job using the volatility to raise additional fiat capital to acquire bitcoin,” BTIG analysts commented.

The investment bank nearly doubled its price target on the stock from $290 to $570, citing several catalysts ahead including Bitcoin’s continued rally, strong BTC Yield performance, higher confidence in its bitcoin premium, and expectations of continued capital raises to acquire more of the cryptocurrency.