Analysis: The market is concerned about MicroStrategy's plan to increase authorized shares by 10 billion

Kobeissi Letter expressed in a letter to X that the market is concerned about MicroStrategy's proposed increase of 10 billion authorized shares. Through a combination of convertible notes and debt issuance, MSTR has heavily leveraged itself. The company must issue more debt or equity to continue its Bitcoin buying spree.

It added: "If approved, MicroStrategy's total shares could increase from 330 million to 103.3 billion. The problem is that it currently puts the company in a 'lose-lose' situation."

Felix Hartmann, founder of Hartmann Capital, said that MicroStrategy's stock price "will eventually collapse, but most short sellers will choose the wrong timing, leading to failed bets on shorting BTC and MSTR."

Hartmann said: "Within five years, MSTR will first become one of the top five companies by market value and then eventually go bankrupt. We are still too early." But he added that the opposite might also be true: "The counterargument is that in a bull market, the company will be able to leverage more when holding $300 billion worth of BTC; repaying $10-40 billion due between 2027-9 would be easy."

Joe Burnett, director of market research at Unchained called MicroStrategy's current strategy as “hyperbitcoinization”. Burnett stated that because they trade at premium prices which allows them through leverage to raise each share’s bitcoin price - “Premium trading enables them to sell stocks at prices higher than net asset values ​​to buy more bitcoins and reduce leverage—further increasing each share’s bitcoin price.”

MSTR's stock price fell by 20.18% within past 30 days but has risen by 342.15% since January 1st.(Cointelegraph)