Shares of MicroStrategy (NASDAQ:MSTR) rose 24.7% higher this week, according to data from S&P Global Market Intelligence. The Bitcoin investment firm was helped this week by the cryptocurrency’s price rise, along with an offering of convertible bonds at a 0% interest rate. As of the market close on Friday, November 22, shares of MicroStrategy are up 515.7% year to date.

This is why shares rose again this week.

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More Bitcoin Valuation and Debt Offerings

In 2020, MicroStrategy CEO Michael Saylor made a bold move by taking over the company’s balance sheet and purchasing Bitcoin. The bet has paid off, with the company selling new common stock and taking on debt to further accelerate its Bitcoin purchases. As of the last update, MicroStrategy now owns 279,420 Bitcoins.

This week, Bitcoin’s price rose about 10%, likely fueling investor optimism about MicroStrategy stock. However, there was another piece of news that likely caught Wall Street’s attention as well. This week, MicroStrategy closed on a $3 billion convertible bond at 0% interest due 2029. A convertible bond is a debt offering that can be converted into common stock if the stock rises above a certain level. MicroStrategy has obtained extremely attractive financing with this debt by paying an annual interest of 0% and maturing in 2029.

Management will now be able to buy more Bitcoin with these funds and won’t have to pay back the principal of the debt or convert it into common stock until 2029 when MicroStrategy’s stock rises above $672.40 per share. Today, the stock is trading at $421.88.

Should You Buy MicroStrategy Stock?

Obtaining financing with 0% interest is attractive, and MicroStrategy can use this to its advantage as more investors line up for the convertible bond offering. However, this doesn’t make the stock a buy for long-term investors.

At its current market cap of $86 billion, MicroStrategy is trading at almost three times the underlying value of its Bitcoin investments, even with how much Bitcoin has risen this year. His other activity – operating a software company – is so small that little value is attached to it. The math is simple: If you want exposure to Bitcoin, you can buy shares of MicroStrategy at three times the actual value of the Bitcoin holdings. Or you can buy Bitcoin yourself. Or you can simply not buy risky cryptocurrencies at all. That’s an option that investors sometimes forget when prices are skyrocketing.

Logical investors know what to do. Skip MicroStrategy stock at these elevated levels. If you want exposure to Bitcoin, buy the actual cryptocurrency instead.

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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Why MicroStrategy Stock Soared 24.7% Higher This Week was originally published by The Motley Fool