Summary:
MicroStrategy is poised for possible inclusion in the Nasdaq 100 Index.
Shares have surged over 500% due to aggressive Bitcoin acquisition strategy.
The company holds over $40 billion in Bitcoin, despite a $340 million net loss in Q3.
Market cap of $98 billion could secure a top position in the Nasdaq 100.
Analysts debate the impact of its software business on index eligibility.
MicroStrategy's Nasdaq 100 Ambitions
Michael Saylor’s MicroStrategy Inc. meets all criteria for joining the Nasdaq 100 Index, which could spark significant purchases from $451 billion worth of exchange-traded funds globally that track this benchmark.
Market Speculation
Despite this, market analysts are considering the possibility of MicroStrategy being excluded in the index’s upcoming reshuffle. The primary concern? MicroStrategy has transformed into a leveraged bet on Bitcoin, raising questions about its place among the top 100 stocks on the Nasdaq.
Analyst Insights
Analyst Lance Vitanza from TD Cowen argues that any substantial company should be reflected in the index, stating, "The idea of an index is it’s supposed to really represent faithfully the body of stocks that are in the universe." MicroStrategy, co-founded by Saylor, has seen its shares skyrocket over 500% this year as it aggressively pursues a strategy of acquiring and holding Bitcoin.
Bitcoin Holdings and Financial Health
Currently, MicroStrategy holds over $40 billion in Bitcoin, despite reporting a net loss of $340 million in Q3. Its impressive $98 billion market cap positions it as roughly the 40th largest stock in the Nasdaq 100, heavily influenced by its Bitcoin strategy.
The Inclusion Debate
Vitanza points out that the Nasdaq might consider the small scale of MicroStrategy's operating business as a reason to exclude it. However, excluding a company with such a large market cap could be seen as counterintuitive.
Unique Classification
MicroStrategy identifies itself as a "Bitcoin Treasury Company," which benefits its inclusion prospects since financial companies are not eligible for the Nasdaq 100. Nevertheless, due to its revenue stream from software, it is classified as a technology company. Analysts suggest that future classifications could change, potentially impacting its eligibility for the index.
Image Caption: MicroStrategy's Bitcoin holdings have significantly influenced its market valuation.
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