MicroStrategy Poised for S&P 500 Inclusion, Bitcoin Price Key to Meeting Criteria

MicroStrategy (MSTR) is positioning itself for potential inclusion in the S&P 500 by June 2025, with just one hurdle remaining: achieving positive GAAP net income for the trailing 12-month period.

The company has already met all the other S&P 500 eligibility requirements, but to fulfill this condition, MSTR needs to offset previous quarter losses with strong earnings in Q1 2025. The company has a good chance to do so, thanks to the recently introduced Financial Accounting Standards Board (FASB) digital asset accounting rule, which allows businesses to value bitcoin (BTC) holdings at their fair market value, instead of the lowest price during the reporting period.

This rule change gives companies like MicroStrategy the ability to realize price gains directly on their balance sheets, as opposed to having to take impairment losses when the market value drops, as was the case in previous years. For instance, MSTR recorded a $1 billion impairment loss in Q4 2024 despite bitcoin closing the year at $94,000 because its bitcoin was still valued below $16,000.

For MSTR to achieve the necessary positive net income, Bitcoin needs to close above $96,337 by the end of Q1 2025. This price point would allow the company to cover its Q4 2024 loss of $671 million, based on its holdings of 478,740 BTC. According to Richard Hass’s analysis, meeting this target would put MSTR on track to meet the trailing 12-month earnings requirement for S&P 500 inclusion.

Benchmark analyst Mark Palmer is confident that MSTR’s path to the S&P 500 is looking increasingly likely. He noted that MSTR’s ability to leverage the new FASB rule strengthens its case for inclusion, as the company has significantly outperformed many other current S&P 500 constituents over the past four years.

“Excluding MSTR from the S&P 500 at this stage would be surprising,” Palmer stated. He further emphasized that, while joining the Nasdaq-100 was a noteworthy achievement for the company, S&P 500 inclusion would serve as the ultimate validation of its Bitcoin strategy. Palmer explained that the inclusion would lead to all S&P 500 index funds holding MSTR shares, offering indirect exposure to Bitcoin for a wide range of investors.