Strategy just announced plans to raise about $21 billion in new shares in an effort to buy more Bitcoin.
Investors, whipsawed by US economy jitters, are dumping both Strategy stock and Bitcoin anyway. The stock plunged 13%, while Bitcoin tanked below $80,000.
The software firm, led by Chair Michael Saylor, announced it will issue new preferred shares to vacuum up more Bitcoin and for “general corporate purposes.”
The plan comes as a disappointing White House crypto summit and President Donald Trump’s trade policies continue to weigh on the market.
On Sunday, Trump told Fox News that the economy faces “a period of transition,” and did not rule out a recession.
US stock prices plummeted again on Monday in New York after the S&P 500 Index posted its worst week since September.
Bitcoin and other cryptocurrencies tend to track riskier assets such as the tech-heavy Nasdaq, which is headed for a 3.6% drop.
Strategy’s new shares will be issued as STRK, separate from Strategy’s MSTR. They are so-called convertible, meaning holders can convert the preferred shares to stock in the company.
Strategy has for months been offering debt and equity as part of a goal to eventually hold some $42 billion worth of Bitcoin.
Monday’s announcement would form the equity half of Strategy’s so-called 21/21 plan.
Saylor has said the company plans to finance the other $21 billion through debt.
Taken together, the raise will ensure Strategy is not “limited by cash flows from our software business to scale up our Bitcoin capital markets initiatives,” CEO Phong Le told investors during an earnings announcement in October.
The firm’s stock has become a proxy for investors seeking indirect exposure to Bitcoin.
As Bitcoin’s price surges, Strategy can then borrow more to supercharge its Bitcoin-buying scheme.
According to Arkham Intelligence, Strategy holds 330,645 Bitcoin, worth about $27.3 billion.
“We have not set any specific target for the amount of Bitcoin we seek to hold,” Strategy wrote.
Andrew Flanagan is a markets correspondent for DL News. Have a tip? Reach out to [email protected].
