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MicroStrategy shares fall 13% after convertible deal for bitcoin purchases

FILE PHOTO: Illustration shows representations of cryptocurrency Bitcoin

(Reuters) - Shares in MicroStrategy were down 13% on Tuesday as bitcoin fell after the company announced it had completed a $603.75 million convertible debt offering - its second in a week - to raise money to buy bitcoin.

The deal, used by the company to raise money to buy bitcoin, follows an $800 million convertible offer that it announced it had completed just a week before.

The company, which also said on Tuesday that it bought 9,245 bitcoins for $623 million between March 11 and March 18, saw its shares tumble as low as $12,750, which was their lowest level since March 7. Bitcoin was last down 5.9% at $63,424.

The latest sale was of 0.875% convertible senior notes due 2031 and convertible into cash or shares of MicroStrategy’s class A common stock, or a combination of both.

Before Sept. 15, 2030, the notes would only be convertible after certain events and during certain periods, according to MicroStrategy.

The conversion rate, which is subject to adjustment, is initially 0.4297 MicroStrategy shares per $1,000 principal amount of notes, or the equivalent to a conversion price of approximately $2,327.21 per share, according to the company.

MicroStrategy said this represents a premium of about 40% over the volume weighted average price of its shares on March 14, 2024, which was $1,662.1999.

MicroStrategy shares were still up more than 100% year to date.

(Reporting by Sinéad Carew; editing by Jonathan Oatis)