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 in the course of the last month of every calendar quarter, and embrace 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 widespread 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 the vast majority 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 constructive 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 constructive 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 potential causes for the index committee’s denials.
To begin with, most corporations don’t acquire speedy inclusion after they first fulfill the entire quantitative benchmarks. The S&P US Index Committee usually waits a couple of quarters so as to add them.
Certainly, even Tesla and plenty of different family names, regardless of their prominence, needed to wait a number of quarters earlier than they joined the S&P 500.
Extra potential causes for S&P 500 delays
MSTR hasn’t been performing notably nicely this yr. Its inventory worth is 39% decrease right now than in the beginning of 2025, and its current 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 massive quantities of BTC doesn’t preclude approval, 10-Q experiences 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 positive factors as a peculiar kind of asset that just about no different S&P 500 constituent possesses.
Though the filings adjust to fashionable accounting guidelines, they’re non-standard and could be a purpose for the S&P US Index Committee’s sluggish assessment of Technique’s utility to hitch 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 typically 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 can be tough to deduce from public reporting about their closed door conferences.
Though S&P Dow Jones Indices might reschedule its This fall announcement for any date, its customary quarterly selections are prone to happen after market shut on December 5. MSTR stays a qualifying candidate for potential inclusion.
On Kalshi, a binary choices playing web site, merchants are accepting bets at 8% odds that MSTR will be part of the S&P 500 Index this yr.
