MicroStrategy’s Addition to Nasdaq-100 May Pave Way for S&P 500 Inclusion: Benchmark

What to know:

  • MicroStrategy’s addition to the Nasdaq-100 could lead to S&P 500 inclusion, which would be an even larger opportunity, the report said.
  • Benchmark said MicroStrategy currently meets some of the criteria for S&P 500 inclusion, but not all of them.
  • The company could meet the remaining requirements to join the index once it adopts new FASB accounting guidance, the broker said.

As a seasoned researcher with years of experience under my belt, I find MicroStrategy’s potential inclusion in the S&P 500 to be a fascinating development. Having closely followed the tech sector and its disruptors, I can attest that this move could prove to be a significant milestone not just for MicroStrategy, but also for the broader crypto ecosystem.

The news of MicroStrategy (MSTR) joining the Nasdaq-100 index is significant, but there’s a possibility that its entry into the U.S.’s S&P 500 index could present an even more substantial opportunity in the near future, as suggested by broker Benchmark in their report on Monday.

On a Friday announcement, it was disclosed that MicroStrategy will join the Nasdaq-100 starting from December 23rd.

According to the report, while the company established by Michael Saylor comfortably satisfies the S&P 500 standards for market capitalization and trading volume, it falls short on meeting two other essential conditions at this time.

In simpler terms, according to analyst Mark Palmer, the company must show a profit in the latest quarter and also have a total profit over the past four consecutive quarters.

Despite this, MicroStrategy has announced that they intend to implement new Financial Accounting Standards Board (FASB) guidelines for the accounting of bitcoin held on their balance sheet starting from the first quarter of 2025. According to Benchmark, this move would allow them to start reporting earnings positively right away.

On Monday, it was announced that MicroStrategy is now the first Bitcoin-related company to join the Nasdaq-100. Once included, it will represent the 40th largest business in the index, holding a 0.47% share, according to a report from broker Bernstein.

How big is the impact?

MicroStrategy’s inclusion in the Nasdaq-100 marks a significant achievement for the company, as it becomes part of the fifth largest Exchange Traded Fund (ETF) by assets, the Invesco QQQ Trust Series ETF. This move will see the company join the index alongside numerous others.

Based on VettaFi’s data, the three largest Exchange-Traded Funds (ETFs) by total assets under management (AUM) are entirely made up of the S&P 500. Specifically, these include the SPDR S&P 500 ETF Trust (SPY), Vanguard S&P 500 ETF (VOO), and iShares Core S&P 500 ETF (IVV). In combination, these three ETFs collectively manage over $1.8 trillion in assets.

After joining the S&P 500 on Dec. 21, 2020, Tesla’s (TSLA) stock experienced a significant increase, doubling within a year from $200 to $400 per share. Most of these gains were actually realized before its inclusion in the index, where the stock had already increased tenfold since December 2019. This might indicate that a large proportion of MicroStrategy’s potential gains could occur prior to joining the benchmark index.

Read More

2024-12-17 13:37