Shares in Bitcoin development firm MicroStrategy popped 3% on Thursday after the company’s executive chairman, Michael Saylor, announced that it will soon undergo a 10-for-1 stock split.
The action will make it far more affordable for smaller investors to gain minimal exposure to MSTR, which left them in the dust during its early-year rally alongside Bitcoin.
Making MicroStrategy More Affordable
Per a Thursday press release from the company, the action will apply to all holders of MicroStrategy’s Class A and Class B common stock. For every share they already hold as of August 1, 2024, they’ll receive another nine shares after trading closes on August 7.
The split will “make MicroStrategy’s stock more accessible to investors and employees,” the company wrote in a Thursday press release. “The stock split will be effected by means of a stock dividend to the holders of record of MicroStrategy’s class A common stock and class B common stock as of the close of business on August 1, 2024, the record date for the dividend.”
A stock split is when a company divides its existing supply of stock into smaller subunits that are individually easier to buy. This is effectively accomplished by issuing more stock at a pre-defined ratio to all current holders.
This has no impact on the proportion of each investor’s share in MicroStrategy at large, though it is severely dilutive to the value of one individual share. As such, once the stock split takes effect at the opening bell on August 8, the value of MSTR shares is likely to plummet to a small fraction of its current price.
Back in May, Stokr announced that it had tokenized MSTR stock as CMSTR on Bitcoin’s Liquid sidechain, letting investors effectively trade in as little as 0.01 MSTR.
The MSTR Playbook
As of Wednesday, MSTR traded for $1,356, while the company’s market cap stood at $24 billion, according to Google Finance. The stock is up 97% since the start of the year, piggybacking on and significantly outpacing the 30% rise in BTC during that time.
Much like altcoins have historically performed, MicroStrategy has tightly correlated with BTC throughout the year, but with greater upside and downside volatility. The firm is the world’s largest operating holder of the asset, possessing 226,331 BTC worth $13.04 billion on its balance sheet.
MicroStrategy has conducted several nine-figure convertible note sales to raise funds to buy more BTC throughout the year. Smaller publicly traded firms are now copying its method of leveraging capital markets to acquire more BTC, including Semler Scientific (SMLR) and Metaplanet.
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