Financial Insights That Matter
A rumor is circulating that MicroStrategy (MSTR) may not sell shares “at the market (ATM)” or issue new convertible debt in January to fund bitcoin (BTC) purchases.
If true, the blackout would devastate a large and growing community of Irresponsibly Long MSTR investors who have come to expect weekly BTC buys from Executive Chairman Michael Saylor.
The claim that MicroStrategy is entering a month of zero convertible debt offerings originates from a venture capitalist who claimed today that Saylor “has a blackout period all of January — cannot issue any new converts to buy BTC.”
Confused investors immediately asked for a source to verify the claim.
Some impromptu researchers speculated that the alleged prohibition against issuing new convertible debt relates to rules governing insider trading. Although the Securities and Exchange Commission (SEC) doesn’t prohibit trading by insiders between the close of a fiscal quarter and the filing of earnings, assuming all disclosures are otherwise up-to-date, many companies self-impose a blackout period as a sort of Wall Street custom.
Read more: MicroStrategy dilutes its shareholders to buy more bitcoin
Self-imposed blackout periods for insider trading
Blackout periods are usually two weeks to one month in length, and most companies re-allow insider trading within two days of quarterly earnings announcements. These self-imposed blackout periods help companies avoid suspicions that its employees are using non-public information to their advantage.
Other researchers speculated that the blackout precluded ATM share sales, not convertible debt issuances.
Still, others guessed that the blackout period actually has nothing to do with insider trading rules but rather committee recommendations pursuant to MicroStrategy’s December 23 addition to the NASDAQ 100 index.
In any case, MicroStrategy has regularly scheduled earnings within the range of February 3-5, 2025. Some believe that a blackout period will last the entire month of January or for just 30 days prior to its earnings call. Others believe the blackout will start on January 14.
Some doubt there is any blackout period whatsoever.
Ultimately, any blackout period is self-imposed so its imposition and duration occur at the discretion of MicroStrategy’s board of directors. The aim of the blackout period is to remain above reproach and ensure compliance with regulation fair disclosure to public investors.
Protos has reached out to MicroStrategy for clarification regarding the terms and dates of any January 2025 blackout period and will update this article if and when we receive a response.
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