Michael Saylor’s MicroStrategy Nears S&P 500 Inclusion with 91% Probability

Financial analyst Jeff Walton predicts that Michael Saylor’s company, MicroStrategy, which is traded under the ticker Strategy, has about a 91% probability of qualifying for inclusion in the S&P 500 during the second quarter, provided Bitcoin's price remains above $95,240. Walton explained that for Strategy to qualify, Bitcoin’s price must not fall below this threshold before June 30. If Bitcoin drops below this level, Strategy, which holds the largest amount of Bitcoin among publicly traded companies at 592,345 Bitcoin, would not generate the necessary positive earnings in Q2 to meet the index's criteria, as it needs to have positive earnings for the last four consecutive quarters. Currently, Bitcoin is trading at approximately $106,200.

To qualify for the S&P 500, a company must show positive total earnings over the past four quarters. However, Strategy has reported net losses in the previous three quarters. Since the company began applying new accounting rules on January 1, 2023, its Bitcoin holdings are revalued at fair market value, and any gains or losses are reflected in its net income each period.

Walton’s forecast is based on Bitcoin trading at around $106,044 at the time of his analysis and on historical data indicating that Bitcoin has dropped more than 10% over six-day periods only 8.7% of the time since September 17, 2014. He notes that as the second quarter ends, the likelihood of Bitcoin not dropping more than 10% increases, with probabilities rising from about 92.4% over five days to nearly 97.6% over one day.

Recent geopolitical tensions caused Bitcoin’s price to dip below $100,000 briefly, but it has recovered to around $106,200. If these conditions hold, Strategy could become the second cryptocurrency-related company to join the S&P 500 this year, following Coinbase’s inclusion in May. Industry experts see this as a significant step toward broader acceptance of cryptocurrencies. Additionally, Strategy is expected to be included in the Nasdaq-100 index by December 2024.