Written by: 1912212.eth, Foresight News
MicroStrategy has officially been included in the Nasdaq 100 index and will take effect before the market opens on Monday, December 23. This also makes MicroStrategy the first cryptocurrency company in the industry to be included in the Nasdaq 100 index.
After that, MicroStrategy Chairman Michael Saylor predicted that Bitcoin mining company MARA would be the next cryptocurrency company to be included in the Nasdaq 100 index.
The inclusion of cryptocurrency companies in the rigorously regulated index reflects an increasing openness of the traditional financial technology industry towards them. From going public to being included in the Nasdaq 100 index, cryptocurrency companies may be igniting a wave of imitation.
Cryptocurrency companies' wave of listings in the U.S.
The U.S. remains the world's leading technology power, and U.S. stocks hold an important position in the global stock market. The expanding circle effect of the cryptocurrency industry often gets widely disseminated through listings in the U.S. Cryptocurrency companies listed on Nasdaq are viewed positively in terms of legitimacy, fundraising, liquidity, and other aspects.
The listing process and requirements for companies in the U.S. often follow high standards. For companies applying for listing, there are very specific requirements and regulations regarding their recent company revenue, market value, market makers, corporate governance, financial reporting, and compliance review.
Since 2020, various entities in the cryptocurrency market, including mining companies, exchanges, and cryptocurrency wallets, have gone public. In the exchange sector, Coinbase went public on Nasdaq in April 2021. Japanese brokerage and cryptocurrency exchange operator Monex Group merged with subsidiary Coincheck Group N.V. and also went public on December 11.
Mining companies include CleanSpark, Mara Digital Holdings, and Riot Platforms. In the field of cryptocurrency wallets, Exodus Movement was listed on the New York Stock Exchange on December 18.
It is worth mentioning that some companies did not initially have cryptocurrency as their main business when they went public, but later shifted to the cryptocurrency industry, such as Riot Blockchain and MicroStrategy.
In addition to the cryptocurrency companies listed above, companies still preparing for listing include Bitcoin financial services company Fold, DeFi Technologies, and online brokerage firm eToro.
US exchange Kraken appointed new CFO Stephanie this November, and its CEO stated they are preparing for listing. Circle's CEO also expressed during an interview in October that they have long desired to go public, and this vision has not changed.
In each cycle, many cryptocurrency companies officially go public. With the advancement of compliance and influence in 2025, more cryptocurrency companies may appear in the U.S. market.
Nasdaq 100 Index
After officially going public, the Nasdaq 100 index has become a ladder for gaining further influence and recognition.
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 pay attention to.
Being included in the Nasdaq 100 index means that the market has met its stringent standards for market capitalization, stock liquidity, financial profitability, compliance, etc.
MicroStrategy won its ticket for inclusion through its hoarding strategy and impressive profit levels in recent years.
Since 2020, MicroStrategy has been positioning BTC as its main reserve asset. As MicroStrategy aggressively buys, the strong rise of Bitcoin in this new cycle has also led to a significant increase in its stock price. In January 2023, the MSTR stock price was only $150, while in March 2024, it surged to a high of $1999.99, with a market value of several hundred billion dollars, and in just over a year, its stock price return exceeded 1000%. On December 18, Michael Saylor announced that MicroStrategy's financial operation brought a net gain of 116,940 BTC to shareholders this quarter, with a yield of 46.4%. Calculated at $100,000 per Bitcoin, the net gain for this quarter is approximately $12.28 billion.
Not only do its stock price and profitability perform impressively, but its market capitalization also hovers around several hundred billion dollars, making it one of the few publicly listed cryptocurrency companies to break the $100 billion market cap.
Furthermore, after being officially selected for the Nasdaq 100 index, it also indirectly confirms that its classification does not belong to financial stocks, but is classified as technology stocks based on its main business "Software as a Service."
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 the 2020 financial report, MicroStrategy's annual revenue was $480 million. Since starting large-scale investments in Bitcoin in 2020, MicroStrategy has gradually been regarded as a Bitcoin concept stock, and its main revenue business has also been influenced by Bitcoin investments, although its core business remains software and services.
For the cryptocurrency industry, the influence of the Nasdaq 100 may also inspire more companies to emulate MicroStrategy and join the ranks of Bitcoin investments.
MARA, the next cryptocurrency company to be included in the Nasdaq 100?
Bitcoin mining company MARA has become the next company to watch that may be included in the Nasdaq 100.
Similar to MicroStrategy's style, in the past few months, MARA has raised hundreds of millions of dollars through issuing convertible limited notes to continuously increase its Bitcoin holdings. However, getting selected for the Nasdaq 100 index is quite difficult.
Although MARA is a non-financial company and meets certain requirements for profitability and liquidity, it still significantly lags behind MicroStrategy in terms of market capitalization. Generally speaking, companies included in the Nasdaq 100 tend to have high market capitalizations, and they must reach a certain scale to be included in the top 100.
As of now, MicroStrategy's market value is over $90 billion, while MARA's market value fluctuates around $8 billion, with a distance of more than 10 times between the two.
To join the Nasdaq 100 index, new companies must replace others. Although MicroStrategy is one of the three newly added companies, Illumina ($22.7 billion), Super Micro Computer ($19.8 billion), and Moderna ($15.7 billion) will be removed.
Currently, the three companies set to be removed have market capitalizations exceeding $15 billion, which is more than twice that of MARA, casting a shadow over its inclusion.
MARA still has a considerable distance from the Nasdaq 100 index, perhaps in the near future, MARA will be selected based on data performance.
How far is it from the S&P 500 index?
The S&P 500 includes the 500 largest companies in the United States, covering about 80% of the total market capitalization of the U.S. stock market. The selection of component 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 between the selection criteria for the Nasdaq 100 and the S&P 500 lie in the high requirements for market capitalization and stock liquidity. However, the Nasdaq 100 places more 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 is relatively high standards for mining companies and cryptocurrency companies that have hoarding strategies.
It is well-known that the four-year cyclical nature of the cryptocurrency industry is still effective, and 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 have a considerable negative impact on mining companies and those whose assets are based on Bitcoin. Some companies may even suffer severe setbacks due to cash flow and other factors.
In summary, the selection criteria for the S&P 500 may be overall higher because it considers not only market performance but also strict financial health and industry diversity requirements. The Nasdaq 100 focuses more on market performance and innovation, with a relatively more automated selection process, but inclusion may mean higher market recognition for companies in specific industries.
The company meets the minimum market capitalization and trading volume standards for the S&P 500 index, but currently does not meet other requirements: total positive earnings for the past four consecutive quarters.
Benchmark stock analyst Mark Palmer analyzed that "MicroStrategy has planned to adopt the new Financial Accounting Standards Board (FASB) guidelines in the first quarter of 2025 to account for the Bitcoin held on the company's balance sheet, which will allow it to start reporting positive earnings immediately."
Since launching its Bitcoin acquisition strategy in August 2020, MicroStrategy has incurred cumulative impairment losses of $3.1 billion. In December 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 fair value of net income 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 of several billion dollars in quarterly net income in the first quarter of 2025, which will equal the difference between the recorded value of Bitcoin on its books and its market value. If it turns out that the net income growth is sufficient to produce positive numbers for the past 12 months, plus MSTR's losses in the first three quarters, the company will meet the standard for inclusion in the S&P 500 before the second rebalancing of the index in 2025, which is scheduled for the third Friday in June."
If market conditions remain favorable, MicroStrategy has the opportunity to be included in the S&P 500 index again in June next year, thus achieving a double victory of the Nasdaq 100 and the S&P 500.
