MSTR Stock Price Increases Over 15%: Why It Happened

By Amit Chowdhry ● Jun 14, 2021
  • The stock price of MicroStrategy Incorporated (NASDAQ: MSTR) increased by over 15% during intraday trading. This is why it happened.

The stock price of MicroStrategy Incorporated (NASDAQ: MSTR) increased by over 15% during intraday trading. There are a couple of catalysts driving the stock price up.

$500 Million Offering Of 6.125% Senior Secured Notes Due 2028 With Bitcoin Use of Proceeds Completed

MicroStrategy announced today that it closed its previously announced offering of senior secured notes due 2028. The aggregate principal amount of the notes sold in the offering was $500 million and the notes have an interest at an annual rate of 6.125%. The notes were sold in a private offering to qualified institutional buyers. And the notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by MicroStrategy Services Corporation, a wholly-owned subsidiary of MicroStrategy, and might be similarly guaranteed by certain subsidiaries of MicroStrategy that may be formed or acquired after the closing of the offering. 

The notes and the guarantees are secured on a senior secured basis with MicroStrategy’s existing and future senior indebtedness by security interests on substantially all of MicroStrategy’s and the guarantors’ assets, including any bitcoins or other digital assets acquired on or after the closing of the offering, but excluding MicroStrategy’s existing bitcoins as well as bitcoins and digital assets acquired with the proceeds from existing bitcoins. MicroStrategy’s existing approximately 92,079 bitcoins are being held by a newly formed subsidiary called MacroStrategy LLC.

MicroStrategy estimates that the net proceeds from the sale of the notes and the related guarantees will be about $488 million after deducting initial purchaser discounts and commissions and estimated offering expenses payable by the company. And MicroStrategy plans to use the net proceeds from the sale of the notes to acquire additional bitcoin.

Increase In Bitcoin Price

The increase in bitcoin price was driven by statements by recent statements by Tesla CEO Elon Musk and hedge fund executive Paul Tudor Jones.

In an interview with CNBC, Jones said: “I like bitcoin as a portfolio diversifier. Everybody asks me ‘what should I do with my bitcoin?’ The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities. At this point in time, I don’t know what I want to do with the other 80% until I see what the Fed is going to do.”

And Tesla CEO Elon Musk disclosed that the electric vehicle company will accept bitcoin again when there is confirmation of reasonable clean energy usage by the cryptocurrency miners. Below is the tweet:

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