MicroStrategy's Market Cap and Potential S&P 500 Inclusion

MicroStrategy ( MSTR ), a Bitcoin development company, has seen a surge in its shares, driven by the rise in Bitcoin prices, and now holds over $10 billion worth of BTC. The company's market capitalization currently stands at approximately $12.4 billion, which is not too far from the $15.8 billion required for inclusion in the S&P 500 Index. This index tracks the large-cap U.S. equity market across 500 companies.

If it qualifies for the S&P 500 Index, MicroStrategy's ( MSTR ) shares could see new demand from passive SPY investors, who are not necessarily seeking Bitcoin exposure. According to experts, inclusion in the index could trigger a positive feedback loop, benefiting Bitcoin, as MicroStrategy's primary goal is to acquire as much BTC as possible.

MicroStrategy ( MSTR ) has marketed itself to investors as a Bitcoin ETF with perks, including cash-generative operations and the ability to leverage capital markets. However, experts caution that using MSTR as a proxy for Bitcoin exposure is misguided. The company is exposed to a wider range of variables, such as management expertise and lending environment.

Inclusion in the S&P 500 Index is not guaranteed, as eligible companies must fulfill several criteria, including being domiciled in the United States, boasting sufficient liquidity, and showing net positive earnings over their previous four quarters. Even Coinbase, a crypto exchange with a $39 billion market cap, has struggled with profitability over the past four quarters and has not made it into the S&P 500.

It's worth noting that exchange-traded funds, including Bitcoin ETFs, are also ineligible for the S&P 500.