According to Benchmark, MicroStrategy’s Nasdaq-100 Listing May Be a Step Toward S&P 500 Inclusion

MicroStrategy’s upcoming inclusion in the Nasdaq-100 is a notable achievement, but its potential addition to the S&P 500 index could present an even greater opportunity in the medium term, according to a recent report by Benchmark.

The software company, founded by Michael Saylor, will officially join the Nasdaq-100 index on December 23, a decision announced by the index provider last Friday. While MicroStrategy meets the market capitalization and trading volume criteria for S&P 500 inclusion, it still needs to fulfill two additional requirements. These include reporting positive earnings for the most recent quarter, as well as having a positive earnings total over the trailing four consecutive quarters.

However, MicroStrategy is preparing to adopt the Financial Accounting Standards Board (FASB) guidelines for the treatment of bitcoin held on its balance sheet by the first quarter of 2025. This move would enable the company to start reporting positive earnings, which could bring it closer to qualifying for the S&P 500.

Once it enters the Nasdaq-100, MicroStrategy will become the 40th largest company in the index, with a 0.47% weighting, according to Bernstein. The company’s inclusion in the index is especially important as it will be added to the Invesco QQQ Trust Series ETF, one of the largest ETFs tracking the Nasdaq-100.

The potential impact of joining the S&P 500 could be even greater, especially considering the surge in stock prices that companies often experience when they are added to the index. A similar effect was seen with Tesla, which saw its stock price increase dramatically after being included in the S&P 500 in December 2020. From a price of around $200 a share, Tesla’s stock doubled to $400 within a year, with a substantial portion of the gains occurring before its inclusion. This could suggest that MicroStrategy could experience significant pre-inclusion gains as well, particularly if it moves toward S&P 500 eligibility.