MicroStrategy's S&P 500 Inclusion Prospects

Eric Balchunas, Bloomberg's senior ETF analyst, stated that MicroStrategy's inclusion in the S&P 500 may take time due to its profit record.

To be eligible for the index, companies must show cumulative positive profits over the past four quarters. MicroStrategy has only been profitable in one of those quarters.

However, a new accounting rule allows MicroStrategy to record the fluctuations in its Bitcoin holdings as net income, potentially leading to significant earnings reports that could help it qualify for the S&P 500.

Ultimately, inclusion requires approval from the S&P 500 committee, which may overlook eligible stocks. For example, Tesla was not included despite four profitable quarters in September 2020, leading to a significant drop in its stock price; it finally joined the index a year later.

The committee's criteria for inclusion remain vague, posing a challenge for MicroStrategy, as they have previously excluded qualifying stocks, according to Balchunas.

Recently, MicroStrategy was added to the Nasdaq-100 index, being recognized as the largest corporate Bitcoin holder. In related news, Bitwise forecasted that Coinbase could be part of the S&P 500 as early as next year.

This article was originally published on U.Today