Saylor Defends MicroStrategy Amid MSCI Index Review Concerns

MicroStrategy faces potential removal from MSCI’s equity indices following the index provider’s consultation on crypto-buying companies. JPMorgan highlighted in a recent report that firms with characteristics similar to MicroStrategy could be excluded from MSCI products as early as February. The concern centers around companies where digital asset holdings represent 50% or more of total assets, or where capital-raising activities are primarily used to fund digital asset accumulation—criteria that directly apply to MicroStrategy given its substantial Bitcoin treasury.

MSCI’s review comes at a challenging time for MicroStrategy, with shares plunging 42% over the past month to $175, underperforming even Bitcoin’s decline from record highs. More critically, the company’s market capitalization has fallen below the value of its Bitcoin holdings, currently worth $55 billion compared to nearly $80 billion at its peak in early October. This valuation disconnect complicates MicroStrategy’s ability to raise funding, historically achieved through common share issuances to expand its Bitcoin stockpile.

In response to the index exclusion concerns, Michael Saylor took to social media platform X to articulate MicroStrategy’s fundamental business proposition. ‘Strategy is not a fund, not a trust, and not a holding company,’ Saylor stated. ‘We’re a publicly traded operating company with a $500 million software business and a unique treasury strategy that uses Bitcoin as productive capital.’ This distinction is crucial as MSCI evaluates whether companies like MicroStrategy belong in traditional equity indices.

Saylor emphasized the company’s evolution beyond simple Bitcoin accumulation, highlighting products introduced this year that position MicroStrategy as ‘a Bitcoin-backed structured finance company with the ability to innovate in both capital markets and software.’ The company has adapted its funding strategy amid changing market conditions, shifting from common share offerings to preferred shares with dividend payments as Bitcoin accumulation becomes less lucrative. Saylor maintained that ‘index classification doesn’t define’ the world’s largest corporate Bitcoin holder, underscoring the company’s unwavering commitment to its Bitcoin strategy.

The MSCI decision, scheduled for announcement on January 15, carries significant implications beyond MicroStrategy alone. The index provider’s stance could establish precedent for how crypto-heavy companies are treated across traditional financial markets. MicroStrategy’s experience with major indices has been mixed—the company was added to the tech-heavy Nasdaq-100 late last year, with Bloomberg ETF Analyst James Seyffart estimating the inclusion would generate $2.1 billion in net buying pressure for MicroStrategy shares.

However, the company was passed over for inclusion in the S&P 500 in September, despite qualifying for consideration. That distinction went to Robinhood, which joined fellow crypto platform Coinbase in the prestigious index. Market sentiment regarding MicroStrategy’s commitment to Bitcoin remains strong, with a Myriad prediction market survey showing just 6% of respondents believe the company will sell Bitcoin this year. As traditional financial institutions like JPMorgan monitor the situation and index providers like MSCI reconsider their criteria, the outcome will signal how Wall Street continues to grapple with the integration of cryptocurrency-focused companies into mainstream financial products.