The analyst who co-wrote this piece owns shares of MicroStrategy (MSTR).
MicroStrategy’s (MSTR) addition to the Nasdaq-100 index is a giant deal, however its potential inclusion within the U.S’s S&P 500 index could possibly be an excellent greater alternative within the medium-term, dealer Benchmark mentioned in a report Monday.
The index supplier introduced on Friday that MicroStrategy can be added to the Nasdaq-100 on December 23.
The firm based by Michael Saylor simply meets S&P 500 inclusion standards by way of market cap and buying and selling quantity, however presently doesn’t meet two different necessities, the report mentioned.
The firm must report optimistic earnings for the latest quarter and “complete optimistic earnings for the sum of its trailing 4 consecutive quarters,” analyst Mark Palmer wrote.
Still, MicroStrategy has mentioned that it plans to undertake new Financial Accounting Standards Board (FASB) steerage for the accounting therapy of bitcoin held on its stability sheet within the first quarter 2025, Benchmark mentioned, and this “would place it to right away start reporting optimistic earnings.”
MicroStrategy turned the primary bitcoin firm to enter the Nasdaq-100, and would be the fortieth largest agency within the index, with a 0.47% weighting, dealer Bernstein mentioned in a report on Monday.
How huge is the impression?
MicroStrategy getting into the Nasdaq-100 is a giant milestone for the inventory because the fifth largest ETF by property beneath administration (AUM), the Invesco QQQ Trust Series ETF, will add to the corporate to its index together with many others.
According to VettaFi knowledge, the three largest ETFs by AUM are all comprised of the S&P 500. These are the SPDR S&P 500 (SPY), Vanguard S&P 500 (VOO) and iShares Core S&P 500 (IVV). Collectively these three ETFs maintain over $1.8 trillion in AUM.
The huge impression of getting into the S&P 500 could possibly be seen with Tesla (TSLA) which noticed its inventory surge following its inclusion within the index on Dec. 21 2020. The inventory doubled within the area of a yr from $200 to $400 a share. The lion’s share of the positive factors got here earlier than inclusion to the S&P 500, which noticed the inventory run up 10-fold from December 2019. This might counsel a big portion of MicroStrategy positive factors might come earlier than it joins the benchmark index.
