MicroStrategy's next goal is to join the S&P500 - assets are soaring in cryptocurrencies.

December 24, 2024 10:14 AM JST
Stock prices have risen 480% this year, with a market cap rivaling the top companies in the US.
Next year, the adoption of fair value accounting is optimistic according to Lear's CEO.
MicroStrategy, actively investing in the cryptocurrency Bitcoin, aims to be included in the S&P 500 stock price index constituents. If successful, index funds would purchase a large amount of the company's stock, further popularizing the cryptocurrency, with supporters of the company's founder, Michael Saylor, looking forward to it.

On the 23rd, MicroStrategy met all the index inclusion criteria and joined the Nasdaq 100 Index. Transforming from a software company from the dot-com era to one primarily focused on Bitcoin investments, the company's stock price has risen by 480% this year. Its market cap now rivals that of top US companies.
Saylor's current target is inclusion in the S&P 500. Wall Street insiders see this as challenging but are gaining confidence that they can meet the profit standards next year with the accounting rule changes related to digital assets.
Saylor stated on Bloomberg TV last week, 'For next year, I am optimistic because the adoption of fair value accounting will add $50 billion (about 7.9 trillion yen) of assets to our balance sheet. Under fair value, a 20% increase in Bitcoin would mean an estimated $10 billion in investment returns. I think that's ultimately what people are looking for in relation to S&P index inclusion.'

However, it's not that simple. The S&P Dow Jones Indices Committee tends to exercise discretion in constituent changes, so even if all eligibility criteria are met, there is no guarantee of immediate adoption. Factors like MicroStrategy taking significant risks with Bitcoin or the strong presence of multiple technology companies could potentially work against them.
S&P's public relations officer declined to comment.
To be included in the S&P 500 constituent stocks, it is necessary to maintain profitability for four consecutive quarters. MicroStrategy has not yet met this criterion, but with the introduction of new accounting rules next year allowing companies to include digital assets on their balance sheets and record changes in fair value as net profit, this obstacle will be removed.

MicroStrategy disclosed that it purchased approximately 561 million dollars worth of Bitcoin from the 16th to the 22nd, with an average acquisition price near the record high set last week. The current holdings amount to 0.44 million4262 Bitcoins, with a market value of about 41.3 billion dollars.