MicroStrategy sinks after closing debt finance to buy bitcoin

MicroStrategy Incorporated (NASDAQ:MSTR) slipped almost 20% on Tuesday morning after announcing the end of a debt financing round to buy more bitcoin.

Net proceeds of US$592.3 million were raised through the private issue of convertible senior notes, due to mature in 2031, with MicroStrategy having targeted US$600 million.

This was followed by the purchase of 9,245 bitcoin by MicroStrategy at an average of US$67,382 each, with the firm having said in the initial announcement that proceeds would be put toward more of the digital tokens.

The news comes after bitcoin has slipped from its all-time high of around US$72,000 last week to just over US$64,000 on Tuesday.

MicroStrategy had completed an US$800 million convertible note offering earlier in March, with the funds having been put toward 12,000 bitcoin.

Following the purchases, MicroStrategy has been left holding a total of 214,246 bitcoin, equating to 1.02% of the total supply set to be mined.

Executive chairman Michael Saylor has previously brushed aside questions over whether MicroStrategy plans to sell its bitcoin stash.

“I’m going to be buying the top forever,” he said last month. “Bitcoin is the exit strategy.”

As per MicroStrategy, the latest notes will bear an annual interest rate of 0.875%, having each represented a 0.43% share of its common stock.

At an equivalent initial conversion price of US$2,327.21 per share, MicroStrategy said the notes represented a 40% premium on its stock price last week.

Shares fell 18.7% to US$1,256.02.