MicroStrategy’s (MSTR) addition to the Nasdaq-100 index is an enormous deal, however its potential inclusion within the U.S’s S&P 500 index could possibly be a fair larger alternative within the medium-term, dealer Benchmark mentioned in a report Monday.
The index supplier introduced on Friday that MicroStrategy could be added to the Nasdaq-100 on December 23.
The corporate based by Michael Saylor simply meets S&P 500 inclusion standards when it comes to market cap and buying and selling quantity, however presently doesn’t meet two different necessities, the report mentioned.
The corporate must report constructive earnings for the latest quarter and “complete constructive earnings for the sum of its trailing 4 consecutive quarters,” analyst Mark Palmer wrote.
Nonetheless, MicroStrategy has mentioned that it plans to undertake new Monetary Accounting Requirements 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 constructive earnings.”
MicroStrategy grew to become 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 coming into the Nasdaq-100 is an enormous milestone for the inventory because the fifth largest ETF by belongings beneath administration (AUM), the Invesco QQQ Belief Sequence ETF, will add to the corporate to its index together with many others.
Based on 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 big impression of coming 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 may come earlier than it joins the benchmark index.
