The last hurdle for MSTR to qualify for the S&P 500 is to achieve positive GAAP net income over the trailing 12 months.
Updated Feb 14, 2025, 8:54 a.m. UTCPublished Feb 15, 2025, 5:30 p.m. UTC
Disclaimer: The analyst who wrote this piece owns shares of Strategy (MSTR)
Strategy (MSTR) could be on track for potential S&P 500 inclusion by June 20.
Currently, the company meets all eligibility requirements except one: achieving positive GAAP net income over the trailing 12 months (the most recent four quarters combined). To qualify, Q1 2025 earnings must be high enough to offset losses from the previous three quarters—a goal that could be achieved thanks to the adoption (now mandatory) of the Financial Accounting Standards Board (FASB) digital asset accounting rule.
The FASB rule change requires companies to recognize bitcoin (BTC) holdings at fair value, meaning price gains will flow through to the bottom line (as would price declines). Prior to this rule, corporate digital asset holders were required to account for holdings at their weakest levels. Strategy, for example, in the fourth quarter of 2024 still valued its bitcoin at less than $16,000 per token, leading to a $1 billion impairment loss even as bitcoin closed the year at about $94,000.
Holy Grail
According to an analysis by Richard Hass on X, assuming Strategy holdings don’t change between now and March 31, bitcoin must close the first quarter above $96,337 for the company to meet the positive trailing 12-month earnings requirement. “Based on Q4 2024 earnings of -$671 million in net income MSTR requires $1.113B in Q1 2025 earnings to produce positive earnings in the prior four quarters and become eligible for S&P 500,” he wrote. “Based on MSTR’s current treasury of 478,740 BTC, the required BTC price on March 31 to achieve this is $96,337”.
If bitcoin prices remain strong and MSTR continues accumulating tokens, S&P 500 inclusion is within reach. Said Benchmark analyst Mark Palmer:
“MSTR’s adoption of the amended FASB guidance strengthens its case for S&P 500 inclusion. Given its outperformance of every current index constituent over four years, exclusion would be surprising.”
“While joining the Nasdaq-100 was significant, the S&P 500 is the holy grail,” continued Palmer.” Inclusion would validate its Bitcoin strategy, as all S&P 500 index funds would hold MSTR shares, indirectly exposing investors to Bitcoin.”
Disclaimer: Richard Hass’s original X post was made before Strategy’s latest bitcoin purchase. CoinDesk reached out for updated analysis, including Monday’s acquisition.
James Van Straten
James Van Straten is a Senior Analyst at CoinDesk, specializing in Bitcoin and its interplay with the macroeconomic environment. Previously, James worked as a Research Analyst at Saidler & Co., a Swiss hedge fund, where he developed expertise in on-chain analytics. His work focuses on monitoring flows to analyze Bitcoin’s role within the broader financial system. In addition to his professional endeavors, James serves as an advisor to Coinsilium, a UK publicly traded company, where he provides guidance on their Bitcoin treasury strategy. He also holds investments in Bitcoin, MicroStrategy (MSTR), and Semler Scientific (SMLR).
