MicroStrategy in the S&P 500 next? The one biggest hurdle to winning trading’s ‘holy grail’

3 weeks ago 8

MicroStrategy secured a listing connected the Nasdaq-100 list.
But it won’t get to articulation the S&P 500 scale immoderate clip soon, analysts say.

MicroStrategy’s $44 cardinal Bitcoin stake drove the institution to a adjacent $100 cardinal valuation and an inclusion into the coveted Nasdaq-100 index.

Will inclusion successful the S&P 500 beryllium next?

Probably not, marketplace watchers say.

While the bundle company’s detractors person criticised MicroStrategy for its reliance connected Bitcoin, its monolithic treasure trove is not the crushed wherefore S&P 500 inclusion remains retired of reach.

“The obstruction is the index’s profitability screen,” said Bloomberg Intelligence expert James Seyffart successful a note, shared by chap expert Eric Balchunas connected X. “MicroStrategy falls abbreviated due to the fact that it’s been profitable successful conscionable one of its past 4 quarters.”

Balchunas described the S&P 500 arsenic “the beatified grail” for companies similar MicroStrategy.

He referred to the S&P’s inclusion criteria that dictates that immoderate scale campaigner indispensable station affirmative net successful the astir caller 4th and cumulatively crossed the past 4 quarters.

Inclusion into the S&P 500 would mean placement successful large indexes similar SPY and VOO, offering accepted investors a nonstop Bitcoin proxy done immoderate of the world’s astir wide tracked funds.

The way to S&P500

Under existent accounting rules, MicroStrategy’s Bitcoin holdings are reported astatine their lowest terms since purchase, adjacent if the terms recovers.

However, a caller Financial Accounting Standards Board regularisation alteration successful January could enactment successful MicroStrategy’s favour.

“The caller regularisation volition let MicroStrategy to classify Bitcoin arsenic a fiscal plus and worth it astatine just value, benefiting the company’s net fixed a Bitcoin terms adjacent $100,000,” wrote Seyffart.

With 423,650 Bitcoin present worthy implicit $44 billion, this could align MicroStrategy’s reported net with its existent marketplace performance.

Still, inclusion isn’t guaranteed. Profitability remains conscionable 1 factor, and the S&P committee has afloat discretion implicit which companies articulation the benchmark.

Nasdaq win

MicroStrategy’s inclusion successful the Nasdaq-100, effectual December 23, means that its banal volition articulation index-tracking funds similar QQQ, with implicit $250 cardinal successful assets.

However, this triumph whitethorn beryllium short-lived.

The Nasdaq-100 excludes fiscal firms, and MicroStrategy’s monolithic Bitcoin holdings could pb to a reclassification during the adjacent benchmark reappraisal successful March.

For now, the institution remains classified arsenic a exertion firm, acknowledgment to its software analytics revenue.

If its Bitcoin-centric strategy pushes Nasdaq to reclassify it arsenic a fiscal company, MicroStrategy could beryllium removed from the index.