MicroStrategy Nears S&P 500 Index Inclusion, Aiming to Broaden Bitcoin Exposure in ETF Portfolios
Summary:
MicroStrategy, a leading Bitcoin holder, is nearing qualification for the S&P 500 index, subject to meeting various eligibility criteria. The potential inclusion could lead to widespread Bitcoin presence across many ETF portfolios. MicroStrategy currently has 190,000 Bitcoins, yielding a massive $3.9 billion gain on its investment. The company's advancement towards S&P 500 listing comes as its founder, Michael Saylor, announced a strategic shift from a business intelligence platform to a Bitcoin development firm.
MicroStrategy, the leading corporate Bitcoin holder, is inching closer to qualifying for the S&P 500 index. This move would potentially result in the Bitcoin enterprise featuring in "almost every portfolio". However, the Bitcoin-focused firm must first satisfy stringent qualification standards and achieve a substantial market cap hike. As per available data, MSTR climbed to the 535th rank among the largest publicly traded US companies on Feb. 15, after a rise of 46% over an eight-day trading period.
To be part of the Standard and Poor’s 500 index — which follows the 500 biggest companies listed on US stock exchanges — a company must satisfy multiple eligibility requirements. These preconditions include a minimum market cap requisite and a positive earning streak over the past four consecutive quarters, including the latest one. In addition, at least 250,000 shares should have been traded in the previous six-month period and most of the shares should be publicly held.
Presently, aspiring firms need a market cap of $15.8 billion to qualify. MSTR’s market cap is currently $12.1 billion, implying that its present price of $718 would have to increase to $937 if all circumstances remain constant.
Although MicroStrategy has reported a positive profit margin over its last four quarters, the S&P’s 11-member executive committee must consent to MicroStrategy’s inclusion on the listing. Furthermore, the broad index fund undergoes balancing every third Friday of March, June, September, and December.
Joe Burnett, Senior Product Marketing Manager at Bitcoin financial services enterprise Unchained, believes that if MicroStrategy were to successfully secure an S&P 500 listing, it could trigger an enormous "positive feedback loop" leading to widespread Bitcoin exposure across nearly all ETF portfolios.
Three major ETFs currently tracking the S&P 500 based on assets under management are State Street’s SPY, BlackRock’s IVV, and Vanguard’s VOO. Each of these ETFs boasts over $400 billion in assets, according to VettaFi’s ETF database. The inclusion of MicroStrategy in the S&P 500 would make it represent about 0.01% of the index fund's weighting.
Passive index inflows are critical market drivers. Inclusion in the index would result in automatic buying, boosting MSTR's share price. Higher share prices would allow for increased equity issuance for Bitcoin purchases, attracting more passive inflows, Burnett elaborated.
MicroStrategy presently possesses 190,000 BTC at an average price of $31,224 per coin, which translates to a whopping $3.9 billion gain on its investment. This news comes as the company's founder and chairman, Michael Saylor, announced that MicroStrategy will be shifting from a business intelligence platform to a "Bitcoin development firm" on Feb. 9.
Published At
2/16/2024 7:25:57 AM
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