Microstrategy’s board of directors has announced a 10-for-1 stock split of Microstrategy class A common stock and class B common stock. They have done this to make stock more accessible to investors and employees.
Companies do a stock split to simply divide their existing stocks in the market by increasing the number of shares in a company.
Microstrategy Stock Split to Aid Growth?
In this case, a 10-for-1 split would mean that each investor will own ten times the number of shares, while the worth of the share would be reduced by 10 times. This however does not affect one’s portfolio or the company’s market capitalization.
A stock split causes a decrease of market price of individual shares, but does not change the total market capitalization of the company: stock dilution does not occur.
The stock split will be effected using 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.
As a result of the dividend, each holder of a share of MSTR Class A common stock will receive 9 additional shares of the same category. Meanwhile the shareholders of the class B common stock will receive 9 additional shares.
In each case, the shares are expected to be distributed after the close of trading on August 7 2024. The trading of the split-based shares will start on AUG 8 2024. The stock dividend will not have any impact on the voting rights of stockholders as per the press release of Microstrategy.
Will MSTR Stock Split Put A Rally In BTC?
Microstrategy Michael Saylor is one of the most prominent speakers of Bitcoin adoption. Michael Saylor Firm currently holds over $14.5 Billion worth of BTC. Microstrategy has raised $4 Billion in convertible debt to buy Bitcoin.
The current stock split can also help MSTR to raise more funds for buying Bitcoin. MSTR price is currently trading near $1250 while gaining 5% in the pre-market session. The stock split news of the stock price may push the price to a new high in the coming days.
Meanwhile, the correlation between MSTR and BTC has grown significantly in the past year. The current correlation between Bitcoin and Microstrategy stock is near 0.76. If the stock price sees a rally due to the stock split then Bitcoin price may also observe a rally to the local high in the upcoming days.
What Does This Mean?
Microstrategy has announced recently a stock split of 10 for 1 to increase accessibility to their investors and employees. This move may push the stock price to a new local high in the near future.
The high correlation of BTC and Microstrategy may affect the trend of Bitcoin in the coming days. This recent stock split can also help the company to raise more convertible debt to buy the Bitcoin
