Nasdaq’s review due on Friday, MSCI in January
Some analysts say Strategy does not qualify for inclusion
Strategy shares dropped sharply as bitcoin came off its high
By Shashwat Chauhan
Dec 12 (Reuters) - Bitcoin hoarding giant Strategy (MSTR.O) may be at risk of being removed from the Nasdaq 100 index (.NDX) at its annual reshuffle on Friday, amid questions over its business model that have weighed on its share price, some analysts flagged this week.
After a sizzling rally that pushed its market capitalization to a peak of $128 billion earlier this year, Strategy - which started out as software company MicroStrategy but pivoted to bitcoin investing in 2020 - was included last December under the index’s technology sub-category.
That decision was questioned by some market-watchers who argued that the pioneering business model, which has spawned dozens of copycats, more closely resembles an investment fund.
Strategy reported a net profit of $2.78 billion for the three months ended September 30, compared with a loss of $340.2 million a year earlier, mostly driven by an accounting change that allowed it to book gains on its bitcoin holdings. The Virginia-based company’s revenue from the legacy software business, meanwhile, stood at just $128.7 million.
“If MSTR is deemed to be a holding company or a cryptocurrency company rather than its legacy business as a software company, then it is susceptible to removal,” said Steve Sosnick, chief market analyst at Interactive Brokers.
The exchange operator, whose Nasdaq 100 index tracks the largest non-financial companies by market capitalization, declined to comment ahead of the announcement on Friday.
The Information reported in September that Nasdaq has been tightening requirements for digital asset treasury companies it lists. It has not generally commented on the inclusion of those firms in its indices.
Strategy did not respond to a request for comment.
Index reshuffles are closely watched, since they dictate which companies benefit from billions of passive investor flows. Saylor, though, has generally dismissed worries over potential index exclusion, and some other analysts said they did not expect Nasdaq to delete Strategy on Friday.
<h3>DIGITAL ASSET TREASURY QUESTIONS</h3>
Concerns have grown over the sustainability of crypto treasury companies, whose shares have proved extremely sensitive to bitcoin’s gyrations. Strategy shares are down 65% from their 2024 peak and 36% year-to-date, compared with a 3.6% drop in bitcoin (BTC=) this year.
Strategy’s market value has fallen to $52.7 billion as of Thursday, while its bitcoin holdings are worth more than $61 billion, according to Reuters calculations.
While that isn’t enough to exclude Strategy on market capitalization grounds, Mike O’Rourke, chief market strategist at JonesTrading, argued in a note this week that Strategy had been included on a technicality and that Friday was a “perfect opportunity for Nasdaq to correct last year’s mistake.”
If Nasdaq removes Strategy, the company could experience passive fund outflows of about $1.6 billion, according to estimates by Kaasha Saini, head of index strategy at Jefferies.
Global index provider MSCI (MSCI.N) has raised concerns about the presence of digital asset treasury companies in its benchmarks. MSCI is due to decide in January on whether to exclude Strategy and similar companies.
Saylor told Reuters this month that Strategy was engaging with MSCI, but that if it was excluded it wouldn’t matter.
Some analysts believe that Strategy is safe because its market value is still relatively high. H.C. Wainwright analyst Mike Colonnese doubted Strategy would be removed, since it is “larger than about 30 other companies in the Nasdaq 100.”
Beyond Strategy, Jefferies estimates drugmaker Biogen (BIIB.O) , IT solutions provider CDW (CDW.O) and four other stocks could depart from the Nasdaq 100. The six companies currently have the lowest market cap among the 100 members, according to data compiled by LSEG.
Jefferies expects that retail giant Walmart (WMT.N) , which has a market capitalization of $932.7 billion, is not eligible to be included this time, because its effective first day of trading (December 8) on the Nasdaq was after the exchange’s November 28 reference date for the rebalancing.
Nasdaq’s announcement is expected after the market close on Friday, with changes effective December 22.
Strategy’s wild ride
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MSTR

Strategy may be removed from the Nasdaq 100 index during its annual reshuffle due to concerns over its business model and market capitalization. Analysts are divided on whether Strategy, a bitcoin-focused company, qualifies for inclusion. Its shares have dropped significantly, and its market value is now $52.7 billion. If removed, Strategy could face $1.6 billion in passive fund outflows. Nasdaq's decision is expected after market close on Friday, with changes effective December 22.

PREVIEW-Analysts flag risks for Strategy at Nasdaq's 100 index reshuffle