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(Bloomberg) -- MicroStrategy Inc.’s Michael Saylor may soon have almost as many common shares at his disposal to help fund the company’s Bitcoin buying spree as market behemoths Amazon.com Inc. and Alphabet Inc. have outstanding.
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Analysts expect MicroStrategy will easily win a company-sponsored proposal to increase the number of authorized Class A common shares to 10.3 billion from 330 million when shareholders vote on Jan. 21. Saylor, co-founder and chairman of the dot-com-era software maker turned leveraged Bitcoin proxy, controls about 47% of the voting power.
That would give MicroStrategy the ability potentially to have more shares outstanding than all but four of the five largest members of the Nasdaq 100 Index — Nvidia Corp., Apple Inc., Alphabet and Amazon.com. In October, MicroStrategy announced that it would use an at-the-market share-issuance program as well as debt sales to raise $42 billion in capital over three years to buy Bitcoin. Since then, the company has almost doubled its holdings of the token to more than $44 billion through 10 consecutive weekly purchases.
In most instances, such a potential share increase would be frowned upon by investors because it dilutes earnings per share, shareholder equity and voting rights.
“That generally would not be viewed positively, certainly by the existing shareholders and probably by the market as a whole, unless investors see this as a necessary step for the company moving forward to reorient its strategy,” said Ed Clissold, chief US strategist at Ned Davis Research Inc.
In this case, investors may not care. MicroStrategy has become a Wall Street favorite because of the eye-popping gains of more than 2,500% that the shares have registered since it embarked on the Bitcoin buying strategy in 2020. Bitcoin is up almost 800% during the same period.
The gap between shares authorized and outstanding can be wide. Alphabet has 300 billion authorized, while Nvidia has 80 billion. And MicroStrategy’s more than 10 billion authorized shares may not all be sold. While MicroStrategy is more than two-thirds of the way through the already alloted $21 billion share issuance, the company has added only just over 43 million shares through at-the-market sales since the plan was implemented.