By Michael Scott
Michael Saylor-chaired MicroStrategy is edging closer to inclusion in the popular S&P 500 Index following the recent stock price rally.
The Nasdaq-listed business intelligence firm that trades under the ticker symbol MSTR is only $3.7 billion away from the inclusion in the S&P 500 Index. However, listing the Phong Le-led depends on the satisfaction of other eligibility criteria.
MicroStrategy is the leading corporation holding Bitcoins and appears to be edging closer to eligible inclusion on the S&P 500 index. Including MicroStrategy would constitute a critical milestone for the Bitcoin firms to appear on nearly all portfolios.
The Bitcoin-oriented firm would need to satisfy other eligibility criteria besides the need to secure the market capitalization boost. A review of recent data indicates that MicroStrategy leapt upwards to the 535th position in the list of the leading publicly listed entities within the US. The leap on February 15 concluded the eight-day trading span in which MicroStrategy stock rallied 46%.
MicroStrategy Eligibility for S&P 500 Index
The addition of MicroStrategy on the S&P 500 Index – a metric tracking the top 500 listed entities on US stock exchanges mandates the firm to fulfil several eligibility criteria. The firm must meet the minimum market cap besides posting profits over the last four quarters. Additionally, the firm should realize profitability in its recent quarter.
MicroStrategy should indicate that at least 250,000 shares were traded in the past half-year period. The firm should prove that most shares are in the public’s hands.
The current rules for eligible consideration for the S&P 500 Index inclusion mandate the firm to realize a $15.8 billion market capitalization. A review of the Saylor-chaired MicroStrategy’ shows the firm’s market cap at $12.1 billion. The firm’s share price should increase to $937 to meet the cap.
MicroStrategy’s stock meets the positive sum of profits requirement in the past four quarters. Besides, the recent quarter saw the firm realize a healthy profit.
Assuming that MicroStrategy has met the above criteria, the 11-member committee will establish a meeting to approve the firm’s listing. In the May 2022 decision, the executive committee temporarily excluded Elon Musk-led Tesla Inc. from the S&P 500 ESG index.
It is critical to note that the broad index fund periodically rebalances every third Friday in March, June, September, and December.
Bitcoin Listing in “Nearly All” Portfolio
Including MicroStrategy within the S&P 500 Index would portray massive positive feedback for the Bitcoin affiliations. Such would yield exposure in nearly all the exchange-traded fund (ETF) portfolios, as observed by a senior marketing executive at Bitcoin-based financial services firm – Unchained.
Burnett indicated that including the business intelligence firm will trigger automatic infiltration in nearly all portfolios. The infiltration would extend to the traditional 401K and pension fund while extending to the 60:40 portfolio.
The top three leading ETF issuers by assets under management (AUM) are tracking the S&P 500 index. The dominant are led by the SPDR S&P 500 ETF Trust issued by State Street. The iShares Core S&P 500 by BlackRock are also featured alongside the Vanguard S&P 500 ETF. Each is responsible for assets worth over $400 billion per VettaFi’s ETF database.
MicroStrategy Closer to S&P 500 Index
Including MicroStrategy in the critical S&P 500 index would yield 0.01% of the portfolio weighting. Further data review shows that the S&P 500 commands $41.9 trillion in market capitalization. This indicates that MicroStrategy would attain $12 billion in passive capital allocation translated from the 0.01% weighting.
Burnett observed that the passive index flows dictate the markets. The Inclusion would match the automatic purchasing. Such would bolster the share price and fuel more equity issuance for the Bitcoin buys. The process would fuel the share price further, thus triggering additional passive flows.
MicroStrategy holds over 190,000 bitcoins, the average acquisition price of $31,224. It implies that the Saylor-chaired firm is $3.9 billion higher on the investment. The firm’s founder recently disclosed that MicroStrategy is moving towards becoming a Bitcoin development firm.