Disclaimer: The analyst who authored this article holds shares of Strategy MMSTR.
Strategy MMSTR may be on track for potential inclusion in the S&P 500 by June 20.
Currently, the company fulfills all eligibility criteria apart from one: it must achieve positive GAAP net income over the trailing 12 months (the latest four quarters in total). To qualify, the earnings for Q1 2025 need to be sufficient to compensate for losses from the preceding three quarters—an aim that may be attainable due to the newly mandated Financial Accounting Standards Board (FASB) digital asset accounting rule.
The adjustment in FASB regulations requires firms to account for their bitcoin BTCUSD holdings at fair value, thereby allowing gains (and losses) in price to impact the financial results directly. Previously, companies holding digital assets had to record them at their lowest valuations. For instance, in Q4 2024, Strategy valued its bitcoin at less than $16,000 per token, resulting in a $1 billion impairment loss, despite bitcoin’s year-end price of approximately $94,000.
Holy Grail
As per Richard Hass’s analysis on X, assuming that Strategy’s holdings remain unchanged until March 31, bitcoin needs to conclude the first quarter above $96,337 for the company to achieve the positive trailing 12-month earnings benchmark. “Considering Q4 2024 earnings of -$671 million in net income, MSTR needs $1.113B in Q1 2025 earnings to create positive earnings in the prior four quarters and qualify for the S&P 500,” he stated. “Given MSTR’s current treasury of 478,740 BTC, the necessary BTC price on March 31 to meet this is $96,337.”
If bitcoin prices stay resilient and MSTR keeps accumulating tokens, S&P 500 inclusion is achievable. Benchmark analyst Mark Palmer remarked:
“MSTR’s adherence to the revised FASB guidelines enhances its case for S&P 500 inclusion. Considering it has outperformed every current index constituent over the past four years, exclusion would be unexpected.”
“While joining the Nasdaq-100 was a remarkable achievement, the S&P 500 represents the holy grail,” Palmer added. “Inclusion would not only affirm its Bitcoin strategy, but also ensure that all S&P 500 index funds hold MSTR shares, indirectly providing investors exposure to Bitcoin.” Disclaimer: Richard Hass’s original post on X was made prior to Strategy’s latest bitcoin acquisition. CoinDesk has reached out for updated insights, factoring in Monday’s purchase.
