MicroStrategy's recent announcement of a $250 million preferred stock offering has stirred the market, impacting the ETF Opportunities Trust T-Rex 2X Long MSTR Daily Target ETF (MSTU). The offering, which involves 2.5 million shares of Series A Perpetual Strike Preferred Stock, is intended to fund general corporate purposes, including further Bitcoin acquisitions. This move has raised concerns about potential dilution for existing shareholders, as the preferred stock comes with a $100 per share liquidation preference and cumulative dividends payable quarterly starting March 2025. The market's reaction reflects apprehension over the new dividend obligations and the potential impact on MicroStrategy's stock value, which is closely tied to Bitcoin's performance.
Additionally, MicroStrategy's stock has been under pressure due to recent volatility in Bitcoin prices and the company's strategic decisions. Analysts have noted that MicroStrategy's historical 2:1 volatility premium over Bitcoin is diminishing, partly due to recent financial maneuvers, including a controversial debt call. This has led to a significant sell-off, with MicroStrategy's stock down 5% on Friday and continuing to decline. The company's reliance on Bitcoin's price movements and its leveraged position make it particularly sensitive to fluctuations in the cryptocurrency market, further influencing MSTU's performance.
The ETF Opportunities Trust T-Rex 2X Long MSTR Daily Target ETF (MSTU) is currently priced at $10.28, reflecting a 1.62% decrease from the previous close.