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MicroStrategy (MSTR) Completes Senior Notes Offering, Shares Up

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MicroStrategy (MSTR - Free Report) recently announced the completion of its offering of senior secured notes worth $500 million, slated to mature in 2028. The notes carry interest at an annual rate of 6.125%.

MicroStrategy had earlier proposed offering of $400 million worth of senior secure notes but increased the amount by another $100 million during the announcement of pricing of the notes.

The company added that it expects net proceeds from the sale of the notes to be around $488 million. The net proceeds will be calculated after removing estimated offering expenses, which are payable by MicroStrategy along with all initial purchaser discounts and commissions.

The net proceeds are intended to be utilized for purchase of additional bitcoin.


Shares Jump on the Announcement

Following the announcement, shares of MicroStrategy jumped 15.9% and closed at $598.49 on Jun 14.

Since last year, to drive shareholder value, MicroStrategy has adopted a dual corporate approach of improving its enterprise software business, while simultaneously purchasing and holding blockchain cryptocurrency — bitcoin.

Shares of MicroStrategy seem to have also benefitted as the company filed a Form S-3 Registration Statement with U.S. Securities and Exchange Commission (SEC) that includes two prospectuses.

The first prospectus is a base prospectus that includes offer, issuance and sale of an “indeterminate amount” of the company’s class A shares that can be offered in one or more offerings from time to time.

The second prospectus includes offer, issuance and sale of up to $1 billion worth of class A shares of the company. The net proceeds will be utilized for general corporate purposes, which also include additional purchase of bitcoin, as noted in the SEC filing.

A Look at MicroStrategy’s Bitcoin Efforts

MicroStrategy has doubled down on increasing its bitcoin reserve. The company’s CEO Michael J. Saylor has constantly underscored that bitcoin can “serve as a dependable store of value.”

Further, the company expects that its strategy of acquiring more bitcoins is complementary to its enterprise analytics software business. It holds the idea that bitcoin-related endeavours will put the spotlight on its brand and attract new clients for its software business.

In the first quarter of 2021, MicroStrategy purchased additional 20,857 bitcoins worth $1.086 billion. As of Jun 4, 2021, MicroStrategy has 92,079 bitcoins for a cumulative price of $2.251 billion.

MicroStrategy is a well-known provider of business intelligence software. The company is witnessing rapid adoption of its cloud solutions triggered by the accelerated digital transformation taking place globally owing to the COVID-19 crisis. The company is benefitting from the adoption of its solutions like HyperIntelligence, Library and Dossier as well as its efficient marketing expenditures.

Given the company’s bitcoin efforts, shares of the company have skyrocketed 390.7% compared with industry’s return of 35% in the past year.

Zacks Rank & Stocks to Consider

MicroStrategy currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Cadence Design Systems (CDNS - Free Report) , Intuit (INTU - Free Report) and PTC Inc (PTC - Free Report) . All the stocks carry a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Cadence, Intuit and PTC is currently pegged at 14.4%, 14.8%, and 26%, respectively.

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