There are variables in MicroStrategy's inclusion in QQQ
According to previous reports by Zombit, the US-listed company MicroStrategy, known for investing in Bitcoin, has met all the criteria for inclusion in the Nasdaq 100 index, which could see it included in this ETF during this month's annual reorganization, triggering approximately $2.1 billion in stock acquisitions.
However, according to a report by Bloomberg, market observers are pondering the possibility that this company may be excluded from the annual reorganization, as MicroStrategy's stock price has surged purely due to leveraged bets on Bitcoin, yet it remains just a small software company, with many believing it should not be included in the Nasdaq 100.
In this regard, TD Cowen analyst Lance Vitanza spoke out for MicroStrategy, stating that the idea of the index is that it should truly reflect the state of all stocks in that market, and he rated MicroStrategy as a 'buy' because he believes any large company (including MicroStrategy) that occupies a significant portion of the Nasdaq market should be reflected in the index.
However, Lance Vitanza emphasized that Nasdaq can still use 'MicroStrategy's business size is too small' as a reason for not including it in the index.
Tech company or financial company?
MicroStrategy's current main business is still classified as a tech company, primarily focused on software, meeting the inclusion standards for the Nasdaq 100 index. However, Bloomberg intelligence analyst James Seyffart indicated that ICB might reclassify MicroStrategy as a financial stock in the next change in March next year, which would be detrimental to MicroStrategy since financial companies do not qualify for the Nasdaq 100.
Michael Lebowitz, a portfolio manager at RIA Advisors, stated that MicroStrategy now resembles a commodity or ETF because it is essentially a company that would 'die without Bitcoin.' He believes it should be reclassified as a financial company next year. Michael Lebowitz said during the interview:
"100% of the company's value comes from Bitcoin, as the rest may be negative. A significant part of the company is its Bitcoin holdings and the financial operations surrounding it, so it is a financial company."
How it affects MicroStrategy
If the company is included in the index, the increase in its share trading volume may not significantly impact its liquidity, but it will attract new investors, said TD Cowen analyst Lance Vitanza.
"If you consider the liquidity of this stock and the number of shares traded, it's not a lot. But this will attract new funds, so I think, ultimately, those who own this stock are clearly different from those who bought the stock at market price."
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