According to a recent interview with Barron’s, Michael Saylor, chairman of MicroStrategy, hinted at the possibility of his company joining the prestigious S&P 500 index. While he didn’t provide any concrete statements regarding their potential inclusion, he did mention that due to their positive outlook on Bitcoin, they could see substantial growth in their quarterly net income next year as the value of their Bitcoin holdings continues to rise. This increase would likely come into play when new accounting rules go into effect in 2025, potentially making them eligible for inclusion based on their profits.
However, despite this promising development, there are still several obstacles standing in their way. For one thing, MicroStrategy’s traditional software business – which was their primary focus prior to their heavy investment into Bitcoin – is relatively small and may only be worth around $1 billion. Furthermore, this part of their business currently operates at a loss under U.S. Generally Accepted Accounting Principles (GAAP). As such, they face difficulties meeting the profitability standards required for inclusion in the index.
That being said, the upcoming changes to accounting rules could significantly impact their financial situation by allowing them to revalue their Bitcoin holdings from their current low valuation up to their fair market value. If the price of Bitcoin were to increase further, this shift could result in substantial growth in their net income and potentially put them in line for inclusion based on these new criteria. Nevertheless, it should be noted that final decisions regarding membership in the S&P 500 index are made solely by the S&P Global Index Committee who consider various financial metrics when making their determinations.
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Source: m.theblockbeats.info
