MicroStrategy (MSTR) Rises 3% After Saylor Announces 10-for-1 Stock Split

Shares of Bitcoin development firm MicroStrategy rose 3% on Thursday after the company’s executive chairman, Michael Saylor, announced that it will soon undergo a 10-for-1 stock split.

The move will make it much more affordable for smaller investors to get minimal exposure to MSTR, which left them in the dust during its rally earlier this year alongside Bitcoin.

Making MicroStrategy more affordable

According to a Thursday press release from the company, the action will apply to all holders of MicroStrategy Class A and Class B common stock. For every share they already own as of August 1, 2024, they will receive nine more shares after the close of trading on August 7.

The split “will make MicroStrategy stock more accessible to investors and employees,” the company wrote in a press release Thursday. “The stock split will be effected by way of a stock dividend to holders of record of MicroStrategy’s Class A and Class B common stock as of the close of business on August 1, 2024, the record date of 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 achieved by issuing more shares in a predefined proportion to all current holders.

This has no impact on the proportion of each investor’s stake in MicroStrategy overall, although it greatly dilutes the value of an individual share. Therefore, once the stock split takes effect at the opening bell on August 8, MSTR’s stock value is likely to plummet to a tiny fraction of its current price.

In May, Stokr announced that it had tokenized MSTR shares as CMSTR on the Bitcoin Liquid sidechain, allowing investors to effectively trade as little as 0.01 MSTR.

The MSTR Playbook

As of Wednesday, MSTR was trading at $1,356, while the company’s market capitalization stood at $24 billion, according to Google Finance. The stock is up 97% since the start of the year, significantly outpacing and outperforming BTC’s 30% rise during that time.

In the same way that altcoins have performed historically, MicroStrategy has been closely correlated with BTC throughout the year, but with greater upside and downside volatility. The company is the largest operating holder of the asset in the world, with 226,331 BTC worth $13.04 billion on its balance sheet.

MicroStrategy has held several nine-figure convertible note sales to raise funds to buy more BTC throughout the year. Smaller publicly traded companies are now copying their method of leveraging capital markets to acquire more BTC, including Semler Scientific (SMLR) and Metaplanet.

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