MicroStrategy Plans $2 Billion Fundraising Through Preferred Stock Issuance

MicroStrategy's Innovative Funding Plan: Raising $2 Billion

MicroStrategy is embarking on an ambitious financial strategy, aiming to raise up to $2 billion through the issuance of preferred stock. This move is part of its broader '21/21' initiative, which entails selling an impressive $42 billion worth of stocks and fixed-income securities. This article explores the implications of this strategy and its potential impact on MicroStrategy and its investors.

Understanding Perpetual Preferred Stock

Mark Palmer, a stock analyst at Benchmark, highlights that MicroStrategy's adoption of a perpetual preferred stock strategy is a significant step forward. By doing so, the company positions itself to attract institutional investors such as insurance companies, pension funds, and banks. These investors often favor assets with:

• Fixed dividends
• Relatively low volatility

Unlike traditional bonds, perpetual preferred stocks do not come with a maturity date or mandatory redemption schedule. This feature allows MicroStrategy to offer indefinite fixed dividend payments as long as it remains operational, potentially increasing its appeal in the financial market.

Market Response and Analyst Ratings

In light of these developments, Benchmark has reiterated its 'buy' rating for MicroStrategy's stock. The firm has set a target price of $650, indicating confidence in the company's ability to execute its funding strategy successfully and drive growth.

Conclusion

MicroStrategy's push into the preferred stock market is an innovative maneuver that could reshape its financial landscape. By attracting institutional investors through fixed dividends and stability, the company could enhance its market position and secure necessary capital for future endeavors. Investors will be keenly watching how this strategy unfolds and what it means for MicroStrategy's overall performance.