MicroStrategy’s ever-growing $37 billion Bitcoin stash has propelled it to the ranks of the most valuable US tech companies.
However, analysts question whether the software company’s skyrocketing $89 billion valuation will be enough to earn it a spot on the prestigious Nasdaq-100 Index.
Joe Nardini, head of investment banking at investment firm B. Riley Securities, told DL News that the official Nasdaq-100 inclusion criteria states that, for a company to be eligible, it can’t be classified as a financial industry firm.
“If the exchange considers Bitcoin a financial instrument, it would make it challenging for MSTR to be added,” added Nardini. “If they buy the argument that Bitcoin is really software, then they have a chance.”
The Bitcoin double-bind
With founder and executive chairman Michael Saylor leading its Bitcoin acquisition approach, MicroStrategy has become the biggest single Bitcoin holder after the cryptocurrency’s mysterious founder Satoshi Nakamoto.
For many investors, MicroStrategy serves as a proxy to Bitcoin, enabling them to tap into the asset without having to deal with crypto exchanges.
The launch of US spot Bitcoin exchange-traded funds, run by investment giants like BlackRock, has challenged its role as a proxy.
Getting listed on the Nasdaq-100 would enable MicroStrategy stock to be added to index-tracking funds like QQQ, further increasing its exposure.
“By size alone, they would get added,” Nardini said. MicroStrategy’s market cap would place it somewhere near the middle of the Nasdaq-100 pack, around peers like Intel and CrowdStrike.
Nasdaq did not comment on whether MicroStrategy will be included on the index when it is rebalanced in mid-December. It only shared its listing standards with DL News as a response to our emails.
MicroStrategy did not return a request for comment.
S&P 500
MicroStrategy’s reach would be even higher if the company also managed to secure a spot in the S&P 500.
S&P 500 inclusion for MicroStrategy is “probably not” coming anytime soon, largely due to its consistently negative bottom line, according to Seoyoung Kim, an associate professor of finance at Santa Clara University’s Leavey School of Business, told CoinTelegraph.
To be eligible for inclusion in the S&P 500, a company must have positive as-reported earnings over the most recent quarter, as well as over the most recent four quarters.
So far in 2024, MicroStrategy has reported operating net losses every quarter, amounting to more than $400 million.
Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.
