Microstrategythe preferred high-beta variant on the price of Bitcoin, will be added to the Nasdaq 100 index, a move that could further increase demand for the controversial stock, which has seen a rapid rise this year along with the price of the cryptocurrency .
The Nasdaq 100 includes 100 of the largest non-financial technology companies Nasdaq Composite Index. The addition of a share means that ETFs – even the very popular ones Invesco QQQ Trustwhich has assets of $325 billion, will also become an automatic buyer.
Bitcoin Proxy stocks could benefit from the move. They have increased more than sixfold this year Bitcoins almost 140% increase over the same period.
The change, which will take effect before the market opens on December 23, was announced after the market closed on Friday. MicroStrategy was widely described as a potential contender for membership by investors looking forward to the index's rebalancing this week.
“This would result in the inclusion of MSTR in some of the largest ETFs such as QQQ (fifth largest ETF), etc., resulting in one-time new purchases… and sustained participation in future inflows,” Bernstein analyst Gautam Chhugani said in a note this week the transformation.
Additionally, “the market will likely eye inclusion in the S&P 500 in 2025,” Chhugani said. “At this time, it may be difficult to be considered for inclusion in the S&P 500 due to the profitability of the software business.”
The Nasdaq changes the composition of the Nasdaq 100 index annually. Companies selected for inclusion are based largely on market capitalization rankings as of the last trading day in November, November 29th of this year. Shares must also meet the eligibility requirements regarding liquidity and the free float of their shares.
MicroStrategy originally sold enterprise software, but the company has increasingly evolved into a Bitcoin holding company. The company first added Bitcoin to its balance sheet in 2020, when Michael Saylor was CEO, and has committed to this strategy in the years since. MicroStrategy is now issuing convertible notes to leverage its purchases, and daily trading of its shares sometimes looks like a more volatile version of Bitcoin.
According to FactSet, the company now has a market capitalization of around $90 billion, despite having revenue of less than $500 million in the last four quarters. Saylor told CNBC's “Squawk Box” earlier this month that he sees the company's role as “securitizing Bitcoin.”
“Our job is primarily to bridge the traditional capital markets that want bonds or fixed income or stocks or options, and we connect that with the crypto economy. And we're using Bitcoin as a vehicle to do that,” said Saylor, who is now the company's chief executive officer.
MicroStrategy began expanding its purchases after the US presidential election. Pro-crypto President Donald Trump's victory – particularly his promise to build a national strategic Bitcoin supply – has pushed Bitcoin to new all-time highs, achieved in part by the company's purchases. MicroStrategy now owns 423,650 Bitcoins. Last month, starting November 11, 149,880 of them were purchased in four separate purchases.
As part of MicroStrategy's hot streak this year, activists have promoted Bitcoin investments as an agenda item at shareholder meetings at companies like Microsoft and Amazon. Mining stocks like Mara Holdings have also started adopting Saylor’s Bitcoin return strategy.
Palantir Technologies And Axon Enterprise will also join the Nasdaq 100 later this month. Illumina, Modern And Super microcomputer is removed from the index.
Last year, the Nasdaq 100 added six companies to its annual reconstitution, including DoorDash. Five of those six stocks rose Monday following the announcement, with an average move of 1.21%.
– With reporting by Jesse Pound.