Original author: (Three ways for crypto companies to expand their influence: listing, Nasdaq 100 and S&P 500?)

Original author: 1912212.eth, Foresight News

MicroStrategy has been officially selected into the Nasdaq 100 Index, and will take effect before the market opens on Monday, December 23. This also makes MicroStrategy the first crypto company in the crypto industry to be selected into the Nasdaq 100 Index.

Since then, MicroStrategy Chairman Michael Saylor has predicted that Bitcoin mining company MARA will be the next crypto company to be included in the Nasdaq 100 Index.

The reason behind the inclusion of crypto companies in the index with strict standards is that the traditional financial technology industry is becoming more and more open to them. From listing to being selected into the index 100, crypto companies may be setting off a trend of imitation.

Crypto companies' rush to go public in the United States

The United States remains the world's leading technology power, and U.S. stocks occupy an important position in global markets. The ripple effect of the crypto industry often spreads widely through listings in the United States. The listing of crypto companies on the Nasdaq positively impacts the recognition of the company's legitimacy, access to funding, liquidity, and so on.

The listing process and requirements for companies listed in the United States often follow high standards. For companies applying for listing, there are very specific requirements and regulations regarding their recent revenue, market capitalization, market makers, corporate governance, financial reporting, and compliance review.

Since 2020, crypto companies including mining companies, exchanges, and crypto wallets have been going public one after another. In the exchange sector, Coinbase went public on Nasdaq in April 2021. Japanese brokerage and crypto exchange operator Monex Group merged with its subsidiary Coincheck Group N.V. and went public on December 11.

Mining companies will include CleanSpark, Mara Digital Holdings, and Riot Platforms. In the crypto wallet space, Exodus Movement will go public on the NYSE on December 18.

It is worth mentioning that some companies initially listed with businesses not related to the crypto industry later transitioned into the crypto industry, such as Riot Blockchain and MicroStrategy.

In addition to the aforementioned crypto companies going public, companies still in the process of going public include Bitcoin financial services company Fold, DeFi Technologies, and online brokerage firm eToro.

The U.S. exchange Kraken appointed a new CFO, Stephanie, in November this year, indicating preparations for going public. Circle's CEO also stated in an interview in October this year that they have long desired to go public, and this vision has not changed.

In every cycle, many crypto companies officially go public. As compliance and influence continue to advance in 2025, more crypto companies may emerge in the U.S. market.

Nasdaq Index 100

For crypto companies, after going public, the Nasdaq 100 Index has become a ladder to further gain influence and visibility.

The Nasdaq 100 Index is a stock index launched by the Nasdaq stock exchange, consisting of the 100 largest non-financial companies listed on the Nasdaq. This index reflects the overall market performance of these companies and is one of the important indices that global investors focus on.

Being selected for the Nasdaq 100 means that the market recognizes that its market capitalization, stock liquidity, financial profitability, compliance, and other aspects meet strict standards.

MicroStrategy has earned its ticket for selection through its hoarding strategy and impressive profitability levels over the past few years.

Since 2020, MicroStrategy has made BTC its main reserve asset. With MicroStrategy's aggressive buying, the company's stock price has surged due to Bitcoin's strong performance in the new cycle. In January 2023, MSTR's stock price was only $150, while in March 2024, the stock price reached a peak of $1999.99, with a market capitalization of hundreds of billions of dollars. In just over a year, its stock price return rate exceeded 1000%. On December 18, Michael Saylor announced that MicroStrategy generated a net profit of 116,940 BTC for shareholders this quarter, with a yield of 46.4%. Based on the price of $100,000 per Bitcoin, the net profit for this quarter is approximately $12.28 billion.

Not only does its stock price and profitability perform well, but its market capitalization is also around hundreds of billions of dollars, making it one of the few crypto companies with a market cap exceeding $100 billion.

Furthermore, after being officially included in the Nasdaq 100 Index, it also formally categorizes the company as a technology stock based on its main business 'Software as a Service', rather than as a financial stock.

MicroStrategy initially focused on providing business intelligence (BI), mobile software, and cloud-based services. Its main competitors include SAP AG's Business Objects, IBM Cognos, and Oracle Corporation's BI platform. According to its 2020 financial report, MicroStrategy's annual revenue was $480 million. After starting to invest heavily in Bitcoin in 2020, MicroStrategy has gradually been seen as a Bitcoin concept stock, and its main revenue business has also been affected by Bitcoin investments, though its core business remains software and services.

For the crypto industry, the influence of the Nasdaq 100 may also inspire more companies to follow MicroStrategy's example and join the ranks of Bitcoin investors.

MARA, the next crypto company to be included in the Nasdaq 100?

Bitcoin mining company MARA has become the next company to watch that may be selected for the Nasdaq 100.

Similar to MicroStrategy's style, in recent months, MARA has raised hundreds of millions through issuing convertible limited notes to continuously increase its Bitcoin holdings. However, it is quite challenging to be selected for the Nasdaq 100.

Although MARA is a non-financial company and meets certain requirements for profitability and liquidity, it still lags far behind MicroStrategy in terms of market capitalization. Generally speaking, companies selected for the Nasdaq 100 have relatively high market capitalizations, and a company must reach a certain scale to be included in the top 100.

As of now, MicroStrategy's market capitalization is over $90 billion, while MARA's market capitalization fluctuates around $8 billion, a difference of more than 10 times.

To join the Nasdaq 100 Index as a new company, other companies must be removed. Although MicroStrategy is one of the three new companies, Illumina ($22.7 billion), Super Micro Computer ($19.8 billion), and Moderna ($15.7 billion) will be removed.

The three companies that are about to be removed all have market capitalizations exceeding $15 billion, which is more than double that of MARA, casting a shadow over its selection.

MARA still has a significant distance to go before joining the Nasdaq 100 Index; perhaps in the near future, MARA will be selected based on its data performance.

How far is it from the S&P 500 Index

The S&P 500 includes 500 of the largest companies in the United States, covering about 80% of the total market capitalization of the U.S. stock market. The selection of constituent stocks is based on market capitalization, liquidity, profitability, and industry representation. The S&P 500 is considered a benchmark for the health of the U.S. economy and the performance of large-cap stocks.

In comparison, the similarities in the selection criteria between the Nasdaq 100 and S&P 500 include higher requirements for market capitalization and stock liquidity. However, the Nasdaq 100 places greater emphasis on technology and innovation industries and is an important indicator for growth investments.

The S&P 500 also emphasizes financial stability and profitability, which are relatively high standards for mining companies and crypto companies that have adopted a hoarding strategy.

It is well known that the four-year cyclical nature of the crypto industry is still effective. When the market is in a bull cycle, companies often see significant profits, but once the cycle enters a bear market and prices decline, it can negatively impact mining and companies with Bitcoin as an asset. Some companies may even suffer severe losses due to cash flow and other factors.

In summary, the selection criteria for the S&P 500 may be generally higher as it considers not only market performance but also strict requirements for financial health and industry diversity. The Nasdaq 100 focuses more on market performance and innovation, with a relatively more automated selection process, but for companies in specific industries, selection may mean higher market recognition.

The company meets the minimum market capitalization and trading volume standards for the S&P 500 Index, but currently does not meet other requirements: positive total earnings for the past four consecutive quarters.

Benchmark stock analyst Mark Palmer analyzed that 'MicroStrategy plans to adopt new Financial Accounting Standards Board (FASB) guidelines in the first quarter of 2025 to account for Bitcoin held on its balance sheet, which will enable it to immediately start reporting positive earnings.'

Since launching its Bitcoin acquisition strategy in August 2020, MicroStrategy has accumulated impairment losses of $3.1 billion. In December of last year, the FASB issued new guidelines allowing companies holding digital assets on their balance sheets to measure these assets at fair value and record changes in net income at fair value for each reporting period. The new rules will take effect on January 1, 2025.

Palmer continued to analyze that 'MSTR is expected to achieve a one-time growth in quarterly net income of billions of dollars in the first quarter of 2025, which will equal the difference between the recorded value of Bitcoin on its balance sheet and its market value. If it proves that the net income growth is sufficient to produce positive figures over the past 12 months, together with MSTR's losses in the first three quarters, then the company will meet the S&P 500 inclusion criteria before the index's second rebalancing in 2025, which is scheduled for the third Friday in June.'

If the market continues to perform well, MicroStrategy may have the opportunity to be selected again for the S&P 500 Index in June next year, achieving a dual success of Nasdaq 100 and S&P 500.

Original link