Key Highlights:

• MicroStrategy is working towards a $2 billion perpetual preferred stock offering.
• The details of the offering are expected to be announced in the first quarter.
• Benchmark has set a buy rating for MicroStrategy at $650.

Since MicroStrategy adopted a bitcoin-centric strategy in August 2020, it has utilized various strategies to acquire bitcoin (BTC), including cash reserves, at-the-market (ATM) offerings, and convertible bond offerings.

The proposed method of raising capital this time involves using perpetual preferred stock, which was initially indicated on January 3, 2025. This was mentioned during a recent investor meeting held by Benchmark with MicroStrategy’s executive chairman Michael Saylor, where they discussed the offering's potential.

Perpetual preferred stocks are generally appealing since they lack a fixed maturity date and tend to yield fixed dividend payments without granting voting rights to their holders.

During the conference, Saylor highlighted the benefits of perpetual preferreds, emphasizing their long-term viability as a fundraising option, which could offer a steady return to institutional investors such as pension funds.

Although the formal details remain forthcoming, the offering is looking to include options like dividend payouts and possible conversion to common shares among other features as per MicroStrategy's January 3 press release.

Benchmark underscores its confident outlook on MicroStrategy, retaining a strong buy recommendation with a target price still at $650.

As of the latest update, MicroStrategy's bitcoin holdings reached a total of 450,000 BTC after a recent acquisition of an additional 2,530 BTC.

Investors are set to convene for a special meeting on January 21, where they will discuss expansions to the authorized class A common and preferred stock, with the next earnings call slated for February 4.