Broker Bernstein said in a research report Tuesday that MicroStrategy (MSTR) is not only a software company diversifying its corporate treasury into cryptocurrencies, but also a pioneer on the Bitcoin capital market.
“MSTR is the only company that has developed institutional demand for Bitcoin-linked convertible bonds.”
The broker noted that MicroStrategy has so far raised $4 billion in convertible bonds with the aim of buying more Bitcoin. Convertible bonds are a type of debt security that can be converted into shares.
Michael Saylor’s company currently holds 214,400 bitcoins worth about $14.5 billion.
“There is no other company with an aggressive Bitcoin investment strategy that can attract capital on such a large scale.”
Source: Saylor Tracker
The long-term convertible debt strategy means MicroStrategy has enough time to benefit from Bitcoin’s upside potential with limited liquidation risk to the cryptocurrency on its balance sheet.
Bernstein noted that when Bitcoin rises, the Virginia-based company has more room to issue new debt, whereas when the cryptocurrency falls and leverage increases, the company can issue new shares to cut down lever.
This use of both equity and debt has helped MicroStrategy grow its Bitcoin per equity share by nearly 67% over the past four years, the report said.
MicroStrategy has not sold any Bitcoin since it began buying the cryptocurrency in 2020, and it is highly likely that the company will continue to raise capital to add BTC to its inventory.
The brokerage gives MicroStrategy stock an outperform rating with a price target of $2,890.
Annie
According to CoinDesk
