- The Nasdaq exchange has announced its yearly reshuffling of the top 100 largest non-financial companies by market capitalisation and will add MicroStrategy to the list for the first time.
- The growth in MicroStrategy’s stock price, fueled by Bitcoin’s positive performance, has ballooned its market value, allowing it to qualify for inclusion.
- MicroStrategy’s stock will be exposed to passive investment opportunities by being included in Invesco’s QQQ and other ETFs that invest in the Nasdaq’s top companies.
The Nasdaq 100 index tracks the 100 largest companies on the Nasdaq exchange. The companies included are usually recipients of passive fund flows from popular ETFs.
With a market capitalisation of $97.94 billion, MicroStrategy is the 40th largest company on the Nasdaq exchange, largely due to its massive Bitcoin treasury. The company’s share price has risen 505% since the start of the year, ballooning its market capitalisation from roughly $15 billion on Jan. 2 2024 to its current value.
MicroStrategy’s stock rise
MicroStrategy’s tremendous stock price run is driven by its Bitcoin buying efforts, which have spanned from August 2020 to December 2024 and have transformed the company into a quasi-Bitcoin ETF.
In total, the company has spent $23.41 billion on Bitcoin at an average price of $58,200 mainly by issuing debt notes. Its Bitcoin stash is worth $42 billion at market prices at the time of publishing.
More exposure to investors
MSTR’s inclusion in the NAS100 will expose it to more investors and funds that invest in the Nasdaq index. The largest fund that does this is Invesco’s QQQ trust with an AUM of $352 billion, but other funds holding billions of dollars also invest in the companies in the NAS100, like the iShares NASDAQ 100 UCITS ETF.
However, it is worth noting that not all companies in the Nasdaq 100 carry equal weighting. For example, Invesco’s QQQ ETF allocates roughly 53.1% of its portfolio to the top 10 companies on the Nasdaq exchange, while the remainder is distributed among the other 90 companies.
Nonetheless, 0.1% of a $352 billion pie is still significant.
It’s not all positive news
While the Nasdaq’s annual rebalancing will include MicroStrategy, the criteria for companies’ inclusion in the index is the major source of their market value.
MicroStrategy remains a provider of business intelligence technology and solutions, however, if a greater part of its value comes from its Bitcoin holdings, then it could be reclassified as a financial company and removed from the Nasdaq 100.
Bitcoin trades at $102,800 as of publishing while Nasdaq’s rebalancing will take effect on Dec. 23.
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