Should MSTR be Included in S&P500? Strategy Passed Over Again

Core Insights - S&P Global's recent quarterly index updates have once again excluded Strategy, favoring SanDisk for inclusion in the S&P 500, which is particularly detrimental for Strategy as it may also be removed from MSCI's USA benchmark [1][2]. Group 1: S&P 500 Inclusion Criteria - Despite being among the 250 most valuable companies in the U.S., Strategy has never been included in the S&P 500 due to S&P's Index Committee considering multiple qualitative and quantitative criteria beyond market capitalization [2]. - The Index Committee traditionally avoids admitting companies that primarily generate income from asset exposure rather than operational fundamentals, which aligns with Strategy's exclusion [3][7]. - Companies that function more like investment funds, such as holding companies and conglomerates, are often disqualified from the index [3][7]. Group 2: MSCI Benchmark Concerns - JPMorgan reported that MSCI is reviewing how to treat companies primarily involved in Bitcoin or digital asset treasury activities, similar to S&P's approach [4]. - MSCI has proposed excluding companies whose crypto holdings constitute 50% or more of their total assets to prevent distortion in sector weighting [5]. Group 3: Company Positioning and Revenue - Strategy's Chairman, Michael Saylor, emphasized that the company is not a fund or holding company but a publicly traded operating company with a $500 million software business and a unique treasury strategy utilizing Bitcoin [6]. - However, Saylor's comments inadvertently support the argument against Strategy's inclusion in stock indexes, as the company does not meet the revenue thresholds typical for major benchmarks [6][8]. - Companies in the MSCI USA and S&P 500 usually generate tens of billions of dollars annually and rarely report net losses, which Strategy does not achieve based on software revenues alone [8].