MicroStrategy (NASDAQ:MSTR) – Unfazed by $917 million write-off in Q2, MicroStrategy plans to add more Bitcoin using proceeds from proposed $500 million stock offering

MicroStrategy, Inc. MSTR Friday night filed a Form 8-K with the SEC regarding an agreement with Cowen & Co. to sell up to $500 million of its Class A stock.

What happened: The company has also filed a prospectus supplement with the SEC in connection with the offering under its existing automatic registration statement, which became effective June 14.

If the proposed sales go through, the company’s outstanding shares will increase to 11.47 million. The company said it intends to use the net proceeds of the offering for general corporate purposes, including acquiring Bitcoin BTC/USD.

Reacting to the announcement, shares of MicroStrategy fell 1.44% to $258.20 in after-hours trading on Friday, according to data from Benzinga Pro.

Why it matters: MicroStrategy’s core business is its enterprise analytics platform, but it is best known for its decision to adopt Bitcoin as its primary cash reserve asset.

In the presentation of the results for the second quarter, the Michael Saylor-the led company said it acquired 129,699 bitcoins at an average price of $30,664 per bitcoin, net of fees. When last checked, Bitcoin was trading up 1.20% at $21,269.14, which is a discount from MicroStrategy’s purchase price.

See also: EXCLUSIVE: MicroStrategy CEO Michael Saylor Joins Benzinga Live Monday to Talk the Future of Bitcoin

Bitcoin, along with other cryptocurrencies, has come under significant selling pressure amid the financial market downturn seen since the start of the year. The crypto market downturn started even earlier, as most cryptos peaked in early November 2021.

MicroStrategy had to record a non-cash digital impairment charge of $917.8 million in the second quarter due to the crypto winter.

On its bitcoin bet, MicroStrategy said bitcoin is still in its infancy and currently represents a very small fraction of global assets. The company suggested that it has a long-term horizon when it comes to the crypto apex.

“We do not plan to engage in regular bitcoin trading and have not hedged or otherwise entered into any derivative contracts with respect to our bitcoin holdings, although we may sell bitcoin in future periods if necessary to generate cash for cash management and other general corporate purposes,” the company said in the filing.

Photo: Created with an image from michael.com

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