CHINA JUST RUGGED US! MICROSTRATEGY ISSUING NEW STOCK WITH DIVIDENDS!

My Financial Friend

Introduction to Micro Strategy's New Stock Offering

Micro Strategy has announced a new stock offering, called Strike, which is a long-term call option with an 8% dividend. The stock is tradable on the open market and is expected to appeal to a new class of investors.

Key Features of Strike

  • 8% fixed coupon (dividend)
  • Perpetual uncapped call option on MSTR (Micro Strategy's common stock)
  • Conversion right to 1/10th of a share of Micro Strategy
  • $1,000 strike price
  • No voting rights, but anti-dilution protections and corporate governance protections

Target Investors

Micro Strategy believes that Strike will appeal to several classes of investors, including:

  • Micro Strategy common stock investors who want to diversify into a less volatile investment
  • Bitcoin investors who want to gain exposure to Bitcoin through a traditional security
  • Tech investors who want to invest in a company with exposure to the crypto economy
  • Index investors who want to gain exposure to the macro economy or crypto economy
  • Fixed income investors who want a high-yield investment with upside potential

Comparison to Convertible Bonds

Strike is complementary to Micro Strategy's convertible bond strategy, but offers a different investment profile. The convertible bonds have a shorter time horizon and are capped in terms of performance, whereas Strike is a perpetual call option with no cap.

Creditworthiness and Dividend Coverage

Micro Strategy has a strong balance sheet, with $50 billion of Bitcoin holdings and a $20 million annual dividend obligation. The company has 2,350 years of dividend coverage in Bitcoin terms, and 315 years of coverage even if Bitcoin were to trade down 75%.

Valuation Framework

Investors will need to develop their own valuation framework for Strike, considering factors such as the creditworthiness of the company, Bitcoin coverage, and interest rates. Micro Strategy views Strike as an 8% perpetual dividend and a perpetual call option on MSTR.