MicroStrategy stock could surge even higher in the coming weeks, depending on whether the Nasdaq 100 stock index classifies it as a software developer or a financials business, a leading crypto analyst has said.
The Virginia headquartered company could receive a major boost if it is included in the Nasdaq 100 index in a shakeup of the stock market index on Friday, FundStrat’s head of digital asset strategy Sean Farrell said in a talk.
MicroStrategy has already seen its stock price increase by 500% in 2024 on the back of a major surge in Bitcoin’s value this year that has driven sharp increases in the value of the software developer’s stockpile of more than 400,000 Bitcoins.
The crypto investment firm’s stock price could now be boosted even further by new capital from exchange traded funds (ETFs) if it is included on the Nasdaq 100 index, in a reconstitution that could see it replace vaccine maker Moderna, Inc. on Friday, Farrell said.
The Nasdaq 100 index, which was first launched in 1985, aims to cover the top 100 companies from America’s most innovative and fastest growing sectors. The index excludes financiers who are listed on the Nasdaq Financial 100 instead.
MicroStrategy’s inclusion on the Nasdaq 100 stock market index is now largely dependent on whether it is classified as a software developer or a financial sector business.
For a company to be listed on the Nasdaq 100, it must rank in the top 100 by market capitalization, have a trading volume of more than 200,000 shares per day, and be in any sector apart from the financial sector.
MicroStrategy’s inclusion on the Nasdaq 100 would see the stock boosted by capital from the $550 billion in assets under management from ETFs that track the stock market index in what could lead to an “electric” period for the stock, Farrell said.
“I’m definitely adding here and I think it’s probably a very good risk reward to add here,” Farrell said. “The risk is obvious here, that is that it does not get into the index.”
If Microstrategy is added to the Nasdaq 100 index, ETFs will only make adjustments to the new index on Dec. 23, meaning shares in the software-developer-turned-crypto-investor could rally for more than a week, Farrell said.
MicroStrategy, which was started as a data analytics business in 1989, has acquired billions worth of Bitcoin since Aug. 2020 and is currently planning to raise another $43 billion in capital to spend on the cryptocurrency over the next three years.
Shares in Microstrategy’s increased 9% on Wednesday, in a surge Farrell attributed to “excitement” surrounding the possibility the company could be included on the Nasdaq 100 index.
Palantir Technologies Inc., the big data analytics company started by Peter Thiel, is also in the running’s to be included on the Nasdaq 100 index, while server maker SUPER MICRO COMPUTER INC risks losing its place.