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Twitter to raise $1.25 billion via convertible notes offering

Updated: Aug 31, 2024
Published: Mar 1, 2021
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Is Twitter pulling off a “MicroStrategy stunt” as it announced today that it is planning to raise more than $1 billion through convertible notes offering?

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The unsecured notes, due in 2026, will be offered to qualified institutional investors.

Twitter expects to grant the buyers of the notes a 13-day option to purchase an additional $187.5 million of the notes.

Use of net proceeds

The company expects to use a portion of the net proceeds to cover the cost of the convertible hedge transactions and to pay “any amounts due upon conversion or at maturity of its 1%” notes due 2021, and for general corporate purposes such as capital expenditures, potential acquisitions, and capital expenditures.

Last month, MicroStrategy, a business intelligence firm, announced that it would raise $600 million in a similar fashion: senior convertible notes offering.

The business firm revised the figure to $900 million and declared that it would use the net proceeds to buy additional bitcoins.

In a week’s time, the company announced that it had made a $1.026 billion investment in bitcoin.

This was the second-largest known purchase of bitcoin by a publicly-traded U.S. company, with Tesla’s $1.5 billion investment taking the pole position.

This raises the question that apart from its general corporate purposes, will Twitter use the money to invest in bitcoin.

Will Twitter invest in bitcoin

The past few months have shown that what seemed impossible a year ago is now possible, at least in terms of companies investing in the leading digital asset.

Last month, Twitter’s Chief Financial Officer Ned Segal said the company is considering whether it should buy bitcoin or not. The company also said that it is looking into paying employees in bitcoin should they ask for it.

While this may not be in black and white yet, Twitter’s CEO Jack Dorsey is a long-time bitcoin advocate. Twitter’s sister company, Square Inc., recently announced that it had made an investment of $170 million in bitcoin. This is in addition to the $50 million it spent last year in buying the asset.

Though Square has invested significantly in Bitcoin, Twitter’s foray could have a major influence on bitcoin’s price because of the large global audience Twitter has.

Twitter’s share price is 42% up in year-to-date performance.

MicroStrategy share price performance

MicroStrategy has become a major player in the crypto industry due to CEO Michael Saylor’s appetite for bitcoin.

The firm's stock price has gone up 93.15% since the turning of the year, nearly twice as high as that of Twitter.

Since investing in bitcoin in August last year, MicroStrategy's stock price surged from $130+ to $750.

MicroStrategy’s impressive share price performance since investing in bitcoin could potentially lure players such as Twitter to follow suit.

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