Billionaire Michael Saylor Announces 10 for 1 MicroStrategy Stock Split – How Will Bitcoin React?

Bitcoin billionaire Michael Saylor announced on Thursday that MicroStrategy (MSTR) – his Bitcoin development and business intelligence software company – is undergoing a 10-for-1 stock split.

$MSTR announces 10-for-1 Stock Split https://t.co/u7sIjWc9we

— Michael Saylor⚡️ (@saylor) July 11, 2024

A stock split is when a business subdivides all outstanding shares of its stock into smaller amounts. This can help businesses whose individual shares have reached high dollar valuations to make their stock more accessible for smaller investors.

MicroStrategy Targets Accessibility With 10-for-1 Split

“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,” wrote MicroStrategy in a Thursday press release.

The dividend will grant nine additional shares of Class A and Class B stock to all MSTR investors for every one share that they own.

The split is expected to take place after the close of trading on August 7, with trading starting on a split-adjusted basis on August 8.

A stock split does not technically raise or lower an investor’s share in a company, keeping the fundamental value of their portfolio the same.

However, it is severely dilutive to the value of individual shares, which can look frightening on a stock price chart without additional context.

Great move by @saylor and @MicroStrategy team.

Now the plebs will soon be able to afford to play the $MSTR call option game. Market makers will sell these call options and hedge their positions by purchasing thousands, possibly millions, of shares. https://t.co/2r3vSBCzpC pic.twitter.com/0oBmzhGOUb

— Joe Burnett, MSBA (🔑)³ (@IIICapital) July 11, 2024

“Now the plebs will soon be able to afford to play the MSTR call option game,” said Joe Burnett, Senior Product Marketing Manager at Unchained, regarding the stock split. “Market makers will sell these call options and hedge their positions by purchasing thousands, possibly millions, of shares.”

MSTR: The High-Flying Bitcoin Stock

MSTR shares traded for $1305 at Wednesday’s close, representing the minimum threshold amount to gain exposure to the company.

At its peak in late March, the stock flew as high as $1919. Following Thursday’s announcement, MSTR stock leaped 5% in pre-market trading to $1364.

MicroStrategy’s stock has erupted 216% over the past year, acting for investors as a leveraged alternative to buying Bitcoin.

MicroStrategy has bought another massive pile of Bitcoin after raising $800 million in its latest convertible debt sale. Here's the latest.#MicroStrategy #Bitcoinhttps://t.co/pcI2OSjfds

— Cryptonews.com (@cryptonews) June 20, 2024

The company is the world’s largest corporate holder of the cryptocurrency, carrying 226,331 BTC ($13.33 billion) on its balance sheet, using debt and share dilution to purchase much of those tokens.

MicroStrategy’s market cap currently sits at $23.16 billion according to Google Finance, indicating the company is trading at a considerable premium to the value of its Bitcoin holdings.

Back in March, Kerrisdale Capital called MicroStrategy’s Bitcoin premium “unjustifiable” and called for a 50% drawdown in its stock value relative to its BTC holdings.