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$Strategy (MSTR.US)$ bitcoin play raises questions about Nas...
$Strategy (MSTR.US)$ bitcoin play raises questions about Nasdaq 100 inclusion.
Michael Saylor’s MicroStrategy Inc. checks all the boxes for inclusion in the Nasdaq 100 Index, a development that would trigger purchases of the shares by the $451 billion worth of exchange-traded funds around the world that directly track the benchmark.
Yet market watchers are entertaining the possibility it gets snubbed in the index’s annual reshuffling on Friday for one simple reason: MicroStrategy has morphed into a levered bet on Bitcoin attached to a small software company that many say has no business being among the 100 most-important stocks on the Nasdaq.
“The idea of an index is it’s supposed to really represent faithfully the body of stocks that are in the universe,” said TD Cowen analyst Lance Vitanza, who has a “buy” rating on MicroStrategy. “Any large company that makes up a material portion of the Nasdaq universe should be reflected as being in the index.”
Shares of the Tysons Corner, Virginia-based firm co-founded by Saylor have mesmerized Wall Street this year by surging more than 500% as the company accelerates an unconventional plan to raise capital solely to purchase and hold more Bitcoin. It has announced multibillion-dollar acquisitions of the cryptocurrency every Monday over the past five weeks.
With the token’s price reaching all-time highs recently, MicroStrategy now holds more than $40 billion worth of Bitcoin. But its underlying business had a net loss of $340 million in third quarter of this year. Still, the company’s $98 billion market capitalization, which would make it roughly the 40th biggest stock in the Nasdaq 100, is largely based on its Bitcoin buy-and-hold strategy, and this could factor into whether the stock is added to the Nasdaq 100.
Nasdaq could use the small size of MicroStrategy’s operating business as a reason not to add the company to the index, Vitanza said. However, that would be counterintuitive since the company’s market capitalization is so large, he added.
Yet market watchers are entertaining the possibility it gets snubbed in the index’s annual reshuffling on Friday for one simple reason: MicroStrategy has morphed into a levered bet on Bitcoin attached to a small software company that many say has no business being among the 100 most-important stocks on the Nasdaq.
“The idea of an index is it’s supposed to really represent faithfully the body of stocks that are in the universe,” said TD Cowen analyst Lance Vitanza, who has a “buy” rating on MicroStrategy. “Any large company that makes up a material portion of the Nasdaq universe should be reflected as being in the index.”
Shares of the Tysons Corner, Virginia-based firm co-founded by Saylor have mesmerized Wall Street this year by surging more than 500% as the company accelerates an unconventional plan to raise capital solely to purchase and hold more Bitcoin. It has announced multibillion-dollar acquisitions of the cryptocurrency every Monday over the past five weeks.
With the token’s price reaching all-time highs recently, MicroStrategy now holds more than $40 billion worth of Bitcoin. But its underlying business had a net loss of $340 million in third quarter of this year. Still, the company’s $98 billion market capitalization, which would make it roughly the 40th biggest stock in the Nasdaq 100, is largely based on its Bitcoin buy-and-hold strategy, and this could factor into whether the stock is added to the Nasdaq 100.
Nasdaq could use the small size of MicroStrategy’s operating business as a reason not to add the company to the index, Vitanza said. However, that would be counterintuitive since the company’s market capitalization is so large, he added.
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TrumpSupporter : Can MSTR make it to nasdaq 100? Hmm… if yes, it will boost MSTR share price… otherwise, plummeting below 400…