The social media giant Twitter, on Mar 1, announced a $1.25 billion convertible bond offering. Anthony Pompliano now speculates Jack and his team may be preparing to allocate a portion of funds raised to Bitcoin, following MicroStrategy’s route.
Will Twitter Add Bitcoin to their Treasury?
In a tweet, a few hours after Twitter’s announcement, Anthony Pompliano said considering Jack Dorsey’s acknowledgment of BTC’s transformative capabilities; there is no dismissing the decision of Twitter channeling funds to the digital gold and holding BTC in their balance sheet.
BREAKING: MicroStrategy has purchased an additional 328 bitcoin for $15.0 million.
Michael Saylor understands that bitcoin is a game of accumulation.
He also just bought the dip 🙂
— Pomp 🌪 (@APompliano) March 1, 2021
MicroStrategy issued convertible notes, raising $1.05 billion before proceeding to purchase Bitcoin.
Convertible bond offerings are a cheaper way of raising funds for expansion, easier than conventional bond issuance.
Often, the route is by companies that are bullish on their future growth, but their credit ratings are less-than-stellar. Compared to other tech stocks–sliding as investors unwind their positions due to overvaluation concerns, Twitter is firmer.
Still, their financial position isn’t stopping them from issuing a hybrid debt where purchasers will convert their principal and accrued interest into stocks later.
The Twitter convertible bond offering will be private, open for institutional buyers, and will be unsecured. Interests will be payable semi-annually in arrears.
A portion of funds raised will be used for covering the cost of the convertible note hedge transactions. Additionally, they will use them for general corporate purposes, including “capital expenditures, working capital, and potential acquisitions.”
Twitter May Purchase Bitcoin if “Vendor or Employee Asks for Payment in BTC”
It is not clear what company/asset Twitter plans to acquire in the years ahead. However, the crypto community knows that the social media giant has a neutral to bullish view on crypto, especially Bitcoin.
In early February, its Chief Financial Officer (CFO), Ned Segal, said they were considering adding Bitcoin to their balance sheet. If any employee or vendor requests to be paid in BTC, he explains, the tech company will buy Bitcoin as part of its treasury.
“We’ve done a lot of the upfront thinking to consider how we might pay employees should they ask to be paid in bitcoin, how we might pay a vendor if they asked to be paid in bitcoin, and whether we need to have bitcoin on our balance sheet should that happen.”
Square Inc.’s Cash App, according to a BTCManager report, generated $1.63 billion in BTC revenue in Q3 2020, contributing to roughly 80 percent of the mobile payment service platform.