S&P Dow Jones Indices has declined so as to add Technique (previously MicroStrategy) to its S&P 500 index once more. As a substitute of MSTR, the world’s most prestigious inventory index selected SanDisk to switch Interpublic Group.
Though its US Index Committee doesn’t usually clarify its selections, the mid-quarter announcement was curious. The choice didn’t coincide with the committee’s quarterly cadence and solely included a single inventory change.
Usually, quarterly rebalancing bulletins happen through the closing month of every calendar quarter, and embody a number of corporations becoming a member of and exiting the index concurrently.
MSTR satisfies most S&P 500 Index standards
The S&P 500 establishes technical standards for inclusion, and founder Michael Saylor has ensured that Technique’s MSTR frequent inventory satisfies each metric.
Nonetheless, the committee has declined so as to add MSTR for months.
As a qualifying candidate, Technique has a US domicile, derives nearly all of its income domestically, trades on the NASDAQ (NYSE or CBOE would additionally qualify), has a market capitalization within the eighty fifth percentile of the S&P Whole Market Index, had optimistic GAAP earnings in its most up-to-date quarter, traded a minimal of 250,000 shares in its prior six months, and had a sum of optimistic GAAP earnings for its 4 most up-to-date quarters.
Regardless of assembly all of those quantitative standards earlier this yr, Technique administration speculated as to attainable causes for the index committee’s denials.
To start with, most corporations don’t achieve instant inclusion after they first fulfill all the quantitative benchmarks. The S&P US Index Committee usually waits just a few quarters so as to add them.
Certainly, even Tesla and lots of different family names, regardless of their prominence, needed to wait a number of quarters earlier than they joined the S&P 500.
Extra attainable causes for S&P 500 delays
MSTR hasn’t been performing notably effectively this yr. Its inventory value is 39% decrease immediately than at first of 2025, and its latest efficiency has been notably bearish.
After a 12-month slide, its market cap is now decrease than the worth of its bitcoin (BTC) holdings.
As well as, Technique CEO Phong Le admitted that Technique’s heavy reliance on BTC as an asset is problematic for S&P 500 inclusion. Though holding giant quantities of BTC doesn’t preclude approval, 10-Q stories and different SEC filings for Technique are significantly completely different from different corporations.
With over $48 billion in BTC purchases, Technique tallies billions of {dollars} of unrealized features as a peculiar kind of asset that just about no different S&P 500 constituent possesses.
Though the filings adjust to trendy accounting guidelines, they’re non-standard and could be a purpose for the S&P US Index Committee’s gradual assessment of Technique’s utility to affix their index.
Lastly, the committee is in the end free to make use of discretion in figuring out additions and removals. Committee members are nameless and don’t usually clarify their selections.
They may consider long-term stability in a inventory’s efficiency, creditworthiness to pay dividends and bond coupons, or different squishy metrics which might be tough to deduce from public reporting about their closed door conferences.
Though S&P Dow Jones Indices could reschedule its This autumn announcement for any date, its customary quarterly selections are prone to happen after market shut on December 5. MSTR stays a qualifying candidate for attainable inclusion.
On Kalshi, a binary choices playing web site, merchants are accepting bets at 8% odds that MSTR will be a part of the S&P 500 Index this yr.
