Will MSCI Crypto Exclusion Plans Boost Strategy's Near-Term View?

Core Insights - MSCI's decision not to exclude companies with large digital-asset treasuries from its stock indexes positively impacts Strategy Inc. (MSTR), alleviating a significant near-term risk for the company [1][4][11] Group 1: Stock Performance and Market Reaction - Following MSCI's announcement, Strategy shares increased by approximately 6% in after-hours trading, marking a recovery after a decline of about 47.5% in 2025 [2][11] - Over the past year, Strategy shares have decreased by 51.2%, underperforming the Zacks Finance sector's increase of 19.2% and the Financial - Miscellaneous Services industry's decline of 9.2% [9] Group 2: MSCI's Review and Implications - MSCI will conduct a broader review of how digital-asset-holding companies are treated in its indexes, rather than implementing an immediate exclusion [3][6] - Digital Asset Treasury Companies, including Strategy, will remain in MSCI indexes through the February 2026 review, reducing uncertainty around index eligibility [4][11] Group 3: Financial Position and Losses - Strategy reported a substantial unrealized loss of $17.44 billion on its bitcoin holdings in the fourth quarter of 2025, highlighting the volatility associated with its investment strategy [5][11] - The Zacks Consensus Estimate for MSTR's 2026 earnings is projected at $51.60 per share, indicating a year-over-year decline of 33.88% [16] Group 4: Competitive Landscape - Coinbase Global (COIN) competes with Strategy by providing indirect exposure to Bitcoin through transaction fees and has increased its bitcoin holdings to $3.6 billion as of September 30, 2025 [7] - MARA Holdings (MARA) employs a dual approach of large-scale Bitcoin mining and strategic accumulation, holding 52,850 BTC at the end of the third quarter of 2025, which enhances its earnings stability [8]