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I ran some numbers on MSTR, it turns out that doing the $2B Preferred Offering and 2 additional $3B Convertible debt offerings ($6B Total) is not going to be enough to get to the target 25% leverage ratio. It only gets us to 22.26% (assuming Bitcoin stays at these price levels).

So in fact they will likely have to go bigger and bump those converts up to $4B each (or issue 4 $2B Converts) which gets us to 24.9% leverage.

Side note for those still talking about the over leveraged position of MSTR (even today), with the 2027 converting the Debt-to-Equity ratio is currently 0.15. Go take a look at some other companies and see where that stacks up in the "risky leverage" category. Even issuing the proposed $8B in converts it only gets to 0.32.

Q1 is going to be very busy with lots of Bitcoin buying.

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Discussion

Cobweb 11mo ago

When do you foresee MSTR completing the 21/21 plan? I suspect it'll be over in early Q2 and they'll be announcing their next plan. The next plan will be much larger than the 21/21 plan as well.

343PG 11mo ago

Just to chip in here - I can imagine a new plan being announced in the Q3 earnings call a year later than the last one. They seem to like establishing a regular cadence with this stuff and it would make sense for teeing up a plan for the next year, if they have finished by that point. Seems fairly clear they need Bitcoin price to run to get to the 21bn on the debt side.