MicroStrategy, a company with a market capitalization of around $95 billion, is potentially on track to join the Nasdaq 100 index, which includes many of the largest non-financial, Nasdaq-listed companies. The decision will be announced tonight at 8 pm ET, with adjustments going into effect on Dec. 23. However, MicroStrategy’s inclusion could be influenced by its ICB classification, particularly due to the company’s reliance on financial engineering derived from its bitcoin buys.
Bloomberg Intelligence analyst James Seyffart pointed out that the classification of MicroStrategy as a “financial” stock could impact its eligibility for the Nasdaq 100 index. While analysts like Lance Vitanza from TD Cowen believe that MSTR’s operating software business sets it apart from traditional financial companies, there is still uncertainty surrounding its potential inclusion. Vitanza estimates the odds of MicroStrategy joining the Nasdaq 100 to be in the 60-80% range, but he would not be surprised if the company is kept out.
However, Mark Palmer from Benchmark believes that inclusion in the Nasdaq 100 index could provide a significant boost to MicroStrategy’s stock. Currently up 480% this year, the company could benefit from the substantial buying power of giant passive funds like Invesco’s QQQ, should it join the index. While Vitanza is unsure if inclusion would lead to a price spike, he acknowledges that it would expand the company’s investor base and improve its long-term access to capital.
On Monday, TD Cowen analysts raised their price target for MicroStrategy’s stock from $525 to $550, reflecting their confidence in the company’s potential for growth. Despite the uncertainty surrounding its Nasdaq 100 inclusion, Vitanza noted that their view of the stock remains unchanged. MicroStrategy’s shares were trading at around $397 as of 2 pm ET, and the company’s future remains uncertain as it awaits the Nasdaq committee’s decision.
Overall, MicroStrategy’s potential inclusion in the Nasdaq 100 index represents a significant milestone for the company, with the possibility of gaining access to a broader investor base and increasing its long-term capital prospects. While analysts have differing opinions on the likelihood of inclusion, the decision remains in the hands of the Nasdaq committee. As the stock continues to show strong performance this year, investors eagerly await the announcement tonight to see if MicroStrategy will join the ranks of the largest non-financial companies listed on the Nasdaq.
