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MicroStrategy S&P 500 Inclusion: Can Bitcoin Bet Push Firm into Largest 500 on Stock Market?

Last Updated February 22, 2024 9:50 AM
Shraddha Sharma
Last Updated February 22, 2024 9:50 AM
Key Takeaways
  • The researcher initiates a discussion on whether MicroStrategy can join the S&P 500 index.
  • Despite potential implications for Bitcoin-related assets, including BTC, leveraged MicroStrategy is tricky.
  • MicroStrategy has rode Bitcoin momentum in the past and outperformed major indices on several occasions.

Can MicroStrategy, the enterprise analytics software provider with significant Bitcoin holdings, secure a spot on the S&P 500 index? Will Clemente, Co-Founder of Reflexivity Research, ignited the conversation by comparing MicroStrategy’s market capitalization with the S&P 500’s listing threshold.

The community hints at the potential inflow of billions of dollars into Bitcoin-related assets upon MicroStrategy’s hypothetical addition to the index. However, despite the buzz surrounding this possibility, there is skepticism despite an anticipated Bitcoin rally in 2024.

MicroStrategy’s Potential Inclusion

The S&P 500 index, designed to track the performance of the top 500 large-cap U.S. equities, imposes strict criteria for inclusion.

MicroStrategy, as a public company, fulfills several prerequisites, including a minimum market capitalization requirement, positive earnings, and listing on an eligible U.S. exchange.

Yet, there are arguments against the theory. MicroStrategy’s primary business focus and its significant exposure to Bitcoin may not align with the index’s traditional composition.

A user pointed out that MSTR will not be included for not being “appropriate” despite meeting the minimum market cap criteria and profitability requirements. Despite MicroStrategy’s notable Bitcoin holdings, valued at 190,000 BTC, and its robust market performance, the road to S&P 500 inclusion is unlikely.

At the time of writing, MSTR’s current Bitcoin value-to-cost ratio is at a massive 1.65 times. The ratio is based on Bitcoin price of over $51,000, which it touched for the first time in two years, against the acquisition cost of the company.

Since reporting its BTC balance on August 11, 2020, MicroStrategy has seen growth in both its Bitcoin holdings and stock price and has outperformed the S&P 500 index on some occasions due to the BTC momentum. As per data by Bitcoin Treasuries, the value of Bitcoin compared to the US dollar has surged by 331%. Meanwhile, MicroStrategy’s stock price soared by 450% in the same timeframe.

Michael Saylor Remains Positive

Michael Saylor, MicroStrategy’s co-founder and a vocal BTC proponent, continues to be optimistic. In a recent interview with Bloomberg , Saylor emphasized his belief in Bitcoin’s enduring value proposition. He said Bitcoin is the ‘exit strategy’ suggesting the company would keep investing in the digital asset.

In addition, he told the paper that Bitcoin ETF approval is “a rising tide that is going to lift all boats.”

MSTR in Focus

The discussions surrounding MicroStrategy’s potential inclusion in the S&P 500 index are interesting but unlikely.

While MicroStrategy’s substantial Bitcoin holdings and market performance position it as a strong contender, the index’s criteria and traditional composition will present hurdles.

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