- MicroStrategy is on the cusp of joining the Nasdaq-100.
- Its $92 billion market cap would place it in the top half of the coveted index.
- But Michael Saylor’s “Bitcoin bank” ambitions may hold it back.
MicroStrategy shareholders may soon find out whether the software company will be included in the coveted Nasdaq-100 index — and supercharge its exposure to investors.
The Nasdaq is expected to rebalance the list later on Friday. Many shareholders hope that MicroStrategy’s $92 billion market cap will be enough to propel it into the upper half, placing it between chipmaker Marvell Technology and cybersecurity powerhouse CrowdStrike.
There’s just one problem — MicroStrategy’s $42 billion Bitcoin holdings.
While Chair Michael Saylor’s strategy to hoard the cryptocurrency is the key driver behind the firm’s skyrocketing stock price, it could also hold it back.
Joe Nardini, head of investment banking at investment firm B. Riley Securities, recently told DL News that the Nasdaq-100 inclusion criteria states that, for a company to be eligible, it can’t be classified as a financial firm.
“If the exchange considers Bitcoin a financial instrument, it would make it challenging for MSTR to be added,” added Nardini. “If they buy the argument that Bitcoin is really software, then they have a chance.”
What’s at stake
Joining the coveted Nasdaq-100 would be a huge win for Saylor.
The inclusion would further increase MicroStrategy’s exposure by adding the stock to index-tracking funds like QQQ, but also legitimate to his plans to transform the company into a “Bitcoin bank.”
Those plans have already made the software company the biggest single Bitcoin holder behind the cryptocurrency’s mysterious founder Satoshi Nakamoto.
Its inclusion hinges on whether the Nasdaq-100 buys MicroStrategy’s assertion that it’s not just a Bitcoin pumper, but a firm that’s focused on developing analytics products.
At the moment, it’s classified as a technology stock and should therefore be included in the Nasdaq-100, according to Bloomberg Intelligence analyst James Seyffart.
The industry classification benchmark “is based on a company’s revenue source; for MicroStrategy, that’s tech for now,” Seyffart tweeted. “Coinbase isn’t a member of the Nasdaq-100 solely because it classifies as a financial stock.”
He noted that the next industry classification benchmark change will happen in March.
Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.