MicroStrategy Secures Nasdaq-100 Inclusion After Bitcoin-Fuelled Stock Surge

MicroStrategy will be added to the tech-heavy Nasdaq-100 Index, the exchange operator said on Friday, following a meteoric surge in the shares of the bitcoin buyer.

The change comes into effect before the market opens on Dec. 23, Nasdaq said.

Inclusion in the index typically boosts the stock's price, as exchange-traded funds looking to replicate the index's performance buy shares of the newly included firm.

Data analytics firm Palantir Technologies and Taser maker Axon Enterprise were added to the Nasdaq-100 Index along with MicroStrategy. Gene-sequencing equipment maker Illumina, AI server maker Super Micro Computer and vaccine maker Moderna were removed, Nasdaq said.

MicroStrategy, an aggressive investor in the world's largest crypto asset, has seen its shares soar more than six-fold this year, taking its market value to almost $94 billion (roughly Rs. 7,97,387 crore).

The company began buying and holding bitcoin in 2020 as revenue from its software business waned. It is now the largest corporate holder of the cryptocurrency.

Analysts have said MicroStrategy's decision to purchase bitcoin to protect the value of its reserve assets has enhanced the appeal of its stock, which tends to align with the performance of the cryptocurrency.

Bernstein analysts expect the market will likely set its sights on S&P 500 inclusion for MicroStrategy in 2025 following the Nasdaq-100 inclusion.

The brokerage also sees the company's prospects continuing to improve next year, adding it expects "more visibility and recognition beyond fresh ETF inflows," as a result of the Nasdaq-100 inclusion.

Bitcoin has rallied in recent weeks as US President-elect Donald Trump's victory heightened the crypto sector's hopes for easing regulatory roadblocks. Earlier this month, the digital asset catapulted above $100,000 (roughly Rs.84.8 lakh) for the first time.

"Management has shown no signs of slowing this (bitcoin-buying) down and are comfortable buying bitcoin in the $95,000 (roughly Rs. 80.5 lakh) - $100,000 (roughly Rs. 84.8 lakh) range," Bernstein analysts said.

The company held roughly 423,650 bitcoins bought for about $25.6 billion (roughly Rs. 2,17,148 crore) based on the average purchase price as of December 8. The investment is worth around $42.43 billion (roughly Rs. 3,59,905 crore), based on bitcoin's previous close, according to Reuters calculations.

© Thomson Reuters 2024

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