In a significant development, MicroStrategy Inc. MSTR is expected to be admitted to the Nasdaq 100 index, which will necessitate a substantial reconstruction of the index.
This modification, which is contingent upon market cap rankings as of November 29, will take effect subsequent to December 20.
The inclusion of MicroStrategy, which has a market capitalization of $94 billion, will have an impact on passive funds that track the index, including the Invesco QQQ Trust QQQ and the Invesco Nasdaq 100 QQQM, according to a report by Seeking Alpha.
By December 20, these funds, as well as the Global X Nasdaq 100 Covered Call QYLD, will be required to modify their holdings to incorporate MicroStrategy.
MicroStrategy’s inclusion in the NASDAQ 100 provides passive investors with exposure to Bitcoin, as the company currently controls nearly 2% of the Bitcoin supply. MicroStrategy’s strategy, which involves issuing stock to acquire Bitcoin, has the potential to influence the index’s dynamics.
The reconstitution may lead to increased turnover and potential tracking errors for ETFs, as they will need to rebalance their portfolios to accommodate MicroStrategy’s expanding market cap. Investors may capitalize on this distinctive circumstance by engaging in strategic trading.
The NASDAQ 100’s prospective inclusion of MicroStrategy is a testament to its increasing influence in the financial markets, particularly as a result of its aggressive Bitcoin strategy.
Bernstein recently referred to MicroStrategy as a “Bitcoin attractor,” predicting that it could possess 4% of the global Bitcoin supply by 2033. Nevertheless, this approach is not without its hazards, as certain analysts express apprehension regarding its long-term sustainability.
In addition, Michael Saylor, the co-founder of MicroStrategy, recently disclosed that the company is earning substantial profits from its Bitcoin holdings, with a reported $500 million in daily profits as Bitcoin approaches $100,000.
The recent report noted that this has contributed to a 465% year-to-date increase in MicroStrategy’s stock, which has had a significant impact on ETFs linked to its performance.
The rapid completion of MicroStrategy’s recent $3 billion offering of 0% convertible senior notes serves as a testament to the company’s strategy and the confidence of its investors. Despite the absence of interest, these notes permit investors to participate in the equity upside, which is indicative of the market’s desire for exposure to MicroStrategy’s Bitcoin-driven growth.
According to data from Benzinga Pro, Bitcoin was at $96,776 at the time of writing, representing a 0.46% increase in the past 24 hours.
On Friday, MicroStrategy’s stock closed at $387.47, a minor decrease of 0.35%. The stock has experienced a 465% increase in value year-to-date.
According to data from Benzinga Pro, the consensus rating for MicroStrategy stock is “Buy.” The consensus price target is $449.50, indicating a 16% increase, while the highest price target is $690.
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