MicroStrategy’s Nasdaq-100 Status Linked to ICB Classification, Bloomberg Intelligence
MicroStrategy, a leading bitcoin-centric company, has made history by becoming the first company to be included in the Nasdaq-100 Index. This significant development is expected to significantly increase the Nasdaq-100’s exposure to bitcoin, of which MicroStrategy owns approximately $42 billion worth. This inclusion will also expose MSTR to billions of dollars in passive investment.
The Nasdaq-100 Index is a widely followed index that tracks the 100 largest non-financial companies listed on the Nasdaq exchange. Other prominent companies included in the index are Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, and Costco.
The inclusion of MicroStrategy in the Nasdaq-100 Index was announced on December 14, 2024, by the Nasdaq. According to Bloomberg Intelligence senior ETF analyst Eric Balchunas, MicroStrategy’s market capitalization of approximately $92 billion as of November 29, 2024, would rank the company as the 40th largest in the Nasdaq-100 Index, with a likely weighting of 0.47%.
The addition of MicroStrategy to the Nasdaq-100 Index will have a significant impact on the company’s stock price. In the minutes following the press release, the price of bitcoin added modestly to earlier gains, topping $102,000. The inclusion will also expose MicroStrategy to passive investment, with ETFs tracking the Nasdaq-100 having over $550 billion in assets under management.
In an interview, James Van Straten, senior analyst at CoinDesk, stated, "The inclusion of MicroStrategy in the Nasdaq-100 Index is possibly the second-biggest story of 2024, after the launch of US spot-listed ETFs. These funds are often buyers at any price level on a monthly basis, which will add to another buyer of MSTR when Michael Saylor continues to issue at-the-market (ATM) offerings, diluting shareholders but will have a bigger base of buyers."
However, there is a chance that MicroStrategy’s inclusion in the index might be short-lived. As the company’s value comes mainly from its bitcoin holdings rather than its operating business, it may be reclassified as a financial firm in March. In fact, MicroStrategy’s founder and executive Michael Saylor has stated that he plans to turn the company into a "bitcoin bank," making it less of a technology operation.
Conclusion
The inclusion of MicroStrategy in the Nasdaq-100 Index is a significant development that will have far-reaching implications for the company and the cryptocurrency market. The exposure to passive investment and the potential for increased demand for MSTR’s shares will likely drive the company’s stock price higher. However, the possibility of reclassification as a financial firm in March remains a risk that investors should monitor.
FAQs
Q: What is the Nasdaq-100 Index?
A: The Nasdaq-100 Index is a widely followed index that tracks the 100 largest non-financial companies listed on the Nasdaq exchange.
Q: What is the significance of MicroStrategy’s inclusion in the Nasdaq-100 Index?
A: The inclusion of MicroStrategy in the Nasdaq-100 Index will significantly increase the index’s exposure to bitcoin and expose MSTR to billions of dollars in passive investment.
Q: How will the inclusion affect MicroStrategy’s stock price?
A: The inclusion of MicroStrategy in the Nasdaq-100 Index is likely to drive the company’s stock price higher, as it will attract passive investment and increase demand for MSTR shares.
Q: What is the risk associated with MicroStrategy’s inclusion in the Nasdaq-100 Index?
A: The risk associated with MicroStrategy’s inclusion in the Nasdaq-100 Index is the possibility of reclassification as a financial firm in March, which could lead to a decrease in the company’s stock price.
