MicroStrategy to raise $2 Billion via Perpetual Stocks: Is Saylor Running Out of Tricks?

From Volatility Genius to Permanent Capital: Has Saylor's Magic Run Out?

Michael Saylor’s MicroStrategy has announced plans to raise $2 billion through a perpetual preferred stock offering.

You asked me to explain what is Saylor doing. 👇

Big Shift From Convertible Bonds to Perpetual Preferred Stock

Previously, Saylor used convertible bonds - briliant volatility play.

Here’s how it worked:

1. Implied Volatility Arbitrage:

- Saylor issued convertibles pricing implied volatility at 60%, while MicroStrategy’s realized volatility was closer to 200%.

- Hedge funds jumped in, delta-hedging by shorting MSTR stock and locking in easy profits.

- But this came at a cost: Saylor was selling volatility too cheap, giving free money to hedge funds.

2. Zero Interest Rate, High Risk:

- Bonds carried 0% interest - purely a volatility trade.

- Hedge funds could convert in 2029 (ending the trade) or roll-over, betting on continued high volatility.

Now? No conversion mechanism.

With this perpetual preferred stock issuance:

1. Investors get priority dividends but no upside from conversion.

2. The only real upside I see here? It’s PERMANENT CAPITAL for MicroStrategy.

It's no longer a volatility trade - it’s just fixed income with limited upside.

Hedge funds? Likely not interested.

Is Saylor Running Out of Tricks?

This move raises key questions: Is Saylor maxed out?

Hedge funds might have stopped buying his convertibles.

Preferred stock lacks the allure of a volatility trade - no conversion, no hedge opportunities.

MicroStrategy failing spectacularly would be the ultimate signal for a market top.

And the END of the Bitcoin bull run.

If Saylor can’t roll over debt or sustain this play, what happens next?

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Implications for Bitcoin and MicroStrategy

1. Saylor’s Bitcoin Holdings: ~446,400 BTC purchased for ~$27.9 billion (average ~$62,428 per Bitcoin).

2. Current Value: With Bitcoin at ~$92,100, holdings are worth ~$41.1 billion

3. Debt Dynamics: Can MicroStrategy sustain debt-fueled strategy, or will preferred stock be the beginning of the end?

Michael Saylor is impressive, but shift from convertibles to perpetual preferred stock feels… different.

Will new strategy keep the machine running, or is it a signal that hedge funds have walked away?

Your thoughts?

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