Tue, June 18, 2024 at 14:43

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I have some intriguing news about MicroStrategy and its pioneering efforts in the Bitcoin capital markets.

  • 
• Annie

  • Oh, that sounds interesting!😊 What exactly are they doing?

  
• 

  Kang-hoon

  • MicroStrategy has raised $4 billion of convertible debt specifically to buy Bitcoin.

  • This makes them unique as no other company has an active Bitcoin investing strategy that can attract such large amounts of capital.

• Annie

  • Wow, $4 billion is a lot!

  • What is a convertible debt exactly?

  
• ADward

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• 

  Kang-hoon

  • A convertible debt is a type of debt security that can be converted into shares.

  • This allows MicroStrategy to benefit from potential Bitcoin upside while managing liquidation risks.

• Annie

  • I see.

  • So, how much Bitcoin do they currently hold?

  
• 

  Kang-hoon

  • As of now, MicroStrategy holds 214,400 Bitcoins, which are worth about $14.5 billion.

• Annie

  • That's impressive!

  • When did they start buying Bitcoin?

  
• 

  Kang-hoon

  • They started buying Bitcoin as a reserve asset back in 2020.

• Annie

  • Have they sold any of their Bitcoin since then?

  
• 

  Kang-hoon

  • No, they haven't sold any Bitcoin since they started purchasing it in 2020.

• Annie

  • That's quite a commitment.

  • How has this strategy affected their stock?

  
• 

  Kang-hoon

  • According to Bernstein, MicroStrategy's use of both equity and debt has increased their Bitcoin per equity share by nearly 67% in the last four years.

• Annie

  • That's a significant increase!

  • What do analysts think about their stock?

  
• 

  Kang-hoon

  • Bernstein has an outperform rating on MicroStrategy stock with a $2,890 price target.

  • However, the shares were trading 2.5% lower at around $1,470 at the time of publication.

• Annie

  • Interesting.

  • So, what does this mean for the market?

  
• 

  Kang-hoon

  • In the short term, this could be seen as a negative signal.

  • The fact that MicroStrategy's shares are trading lower despite their aggressive Bitcoin strategy suggests market skepticism.

  • 

  • This could potentially lead to increased volatility in both their stock and Bitcoin prices.

• Annie

  • So, you think this news is more of a negative for the market?

  
• 

  Kang-hoon

  • Yes, I believe so.

  • The market's current reaction indicates uncertainty and caution, which could have adverse effects in the short term.

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.