MicroStrategy (MSTR) Stock Soars 13% to Record High after Disclosing $4.6B Bitcoin Purchase

Shares of MicroStrategy (MSTR) soared approximately 13% to a record closing high on Monday after the company disclosed it had acquired $4.6 billion worth of Bitcoin

Shares of MicroStrategy (MSTR) closed at a record high on Monday, rising about 13% after the company said it bought $4.6 billion of Bitcoin and will raise $1.75 billion to buy more of the cryptocurrency.

MicroStrategy's stock has outperformed many others in the S&P 500 index on a year-to-date basis. Data from Yahoo Finance showed that MSTR has soared more than 500% so far in 2024, while shares of Microsoft (MSFT) have risen about 11%.

At the same time, CEO Michael Saylor's bet on Bitcoin is paying off substantially. Not only is MicroStrategy's stock rallying, but its Bitcoin holdings are also generating large gains.

Having purchased 331,200 BTC at an average price of $88,627, the company is sitting on about $13.7 billion in unrealized profits from the cryptocurrency.

MicroStrategy said it plans to use the proceeds from the senior convertible notes, which carry a 0% interest rate and mature in December 2029, to buy more Bitcoin.

This follows similar debt issuances, such as an $875 million convertible senior notes offering in September that had a 2028 maturity, and another issuance in June that matures in 2032.

By issuing convertible notes, MicroStrategy is essentially able to gain access to no-interest/low-interest capital that it uses to buy more Bitcoin, betting on the cryptocurrency's continued price appreciation over the coming market cycles.

The convertible notes give investors the option to convert their debt into shares of MicroStrategy. This conversion feature is appealing, especially given the company's strong stock performance.

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