Strategy Isn't in S&P 500. Now It Could Get Kicked Out of Other Indexes. — Barrons.com
Andrew BaryStrategy has tried in vain to get included in the S&P 500 index, and now the big Bitcoin holder could find itself bounced from MSCI indexes.MSCI, a major provider of global equity indexes, said in October that it plans to review the status of digital asset treasury companies in its indexes. A decision is expected in mid-January.JP Morgan analysts led by Nikolaos Panigirtzoglou on Wednesday highlighted the risk to Strategy from potential selling of its shares by index funds if MSCI decides to exclude digital asset treasury companies from its various indexes."If MicroStrategy is excluded from these indices, it could face considerable pressure to its valuation given that passive index-tracking funds represent a substantial share of its ownership," the JP Morgan analysts wrote.They estimated that Strategy could see selling of about $2.8 billion if it is excluded from MSCI indexes like the MSCI USA and MSCI World, and $8.8 billion of selling if other index providers such as Russell follow MSCI. Other companies that could be negatively affected by an MSCI exclusion are Mara Holdings, Riot Platforms, Hut 8, and Japan's Metaplanet.Strategy shares are down nearly 4% Thursday to $179 after hitting a new 52-week low earlier in the session. The stock has been pressured by the sharp recent drop in Bitcoin, which is off another 4% Thursday to about $88,000.JP Morgan analysts attribute some of the Strategy stock weakness lately to concerns about its status in MSCI indexes. The stock is down over 50% since late July, and its premium relative to its Bitcoin holdings has shrunk to about 1.15 times from about 2.The company has a market value of $52 billion, making it by far the largest digital asset company. It holds 3% of the world's Bitcoin, about 650,000 coins now worth around $57 billion."This index inclusion has enabled bitcoin exposure to indirectly encroach into both retail and institutional investor portfolios. However, with MSCI now considering removing MicroStrategy and other digital asset treasury companies from its equity indices, this previous indirect encroachment could go into reverse," the JP Morgan analysts wrote.The issue of Strategy's inclusion in equity indexes may revolve around whether holders of Bitcoin like Strategy are deemed to be operating companies or just passive asset holders, more like closed-end funds and ETFs that generally aren't eligible for index inclusion.Here is what MSCI said in late October about its review:"As announced on October 10, 2025, MSCI is conducting a consultation on a proposal to exclude companies whose primary business involves Bitcoin or other digital asset treasury activities from the MSCI Global Investable Market Indexes." MSCI said it would be taking comments until the end of the year and make a decision by Jan. 15, 2026.Companies holding Bitcoin and other cryptocurrencies have sought index inclusion — none more so than Strategy.Strategy executives including chairman Michael Saylor have said the company deserves inclusion in the S&P 500, which is the most desirable index for U.S. companies. The company isn't in the S&P 500 or S&P's mid-cap and small-cap indexes.On the company's third-quarter earnings conference call, CEO Phong Le said the company had met the index's key criteria for inclusion, including market value, earnings, and trading volume. Strategy is one of the largest U.S. companies not included in the S&P 500."So now that we meet all the criteria, the question we get often is, why are we not included? We don't know exactly, right?" Le said."Many other highly successful companies — Tesla and the ones I mentioned here, Block and Robinhood — weren't included in their first quarter of eligibility. But we hope to access the index and $13 trillion of capital that tracks the S&P 500 at some point in time," Le added.S&P Dow Jones Indices, which is the gatekeeper for the S&P 500, doesn't say why companies are included or not in its indexes. Its decision is subjective, unlike for other index providers, which are more mechanical in nature, based on market value.Barron's wrote in June that Strategy likely wouldn't make it into the S&P 500 because it was more like a closed-end fund or ETF, which aren't eligible for inclusion in the benchmark, than an operating company.Write to Andrew Bary at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.