Strategy Eyes S&P 500 Inclusion Amid Bitcoin Valuation Changes

According to CoinDesk, Strategy (MSTR) is on the verge of potentially joining the S&P 500 index by June 20, 2025. The company currently meets all but one of the eligibility criteria: achieving a positive GAAP net income over the trailing 12 months. To qualify, Strategy's earnings for the first quarter of 2025 must be sufficient to counterbalance the losses from the previous three quarters. This goal is now more attainable due to the mandatory adoption of the Financial Accounting Standards Board (FASB) digital asset accounting rule. The FASB rule change mandates that companies recognize bitcoin (BTC) holdings at fair value, allowing price gains to impact the bottom line directly, as would price declines. Previously, companies had to account for digital assets at their lowest value. For instance, in the fourth quarter of 2024, Strategy valued its bitcoin at less than $16,000 per token, resulting in a $1 billion impairment loss, despite bitcoin closing the year at approximately $94,000. An analysis by Richard Hass suggests that if Strategy's bitcoin holdings remain unchanged until March 31, 2025, bitcoin must close the first quarter above $96,337 for the company to meet the positive trailing 12-month earnings requirement. Hass noted that based on Strategy's fourth-quarter 2024 earnings of -$671 million, the company needs $1.113 billion in earnings for the first quarter of 2025 to achieve positive earnings over the prior four quarters, thus becoming eligible for S&P 500 inclusion. With Strategy's current treasury of 478,740 BTC, the required bitcoin price on March 31 is $96,337. Benchmark analyst Mark Palmer commented that Strategy's adoption of the amended FASB guidance bolsters its case for S&P 500 inclusion. He highlighted that given Strategy's outperformance compared to every current index constituent over the past four years, its exclusion would be unexpected. Palmer further emphasized that while joining the Nasdaq-100 was significant, inclusion in the S&P 500 is considered the "holy grail." Such inclusion would validate Strategy's Bitcoin strategy, as all S&P 500 index funds would hold Strategy shares, indirectly exposing investors to Bitcoin. CoinDesk has reached out for updated analysis following Strategy's latest bitcoin acquisition.