Nasdaq today expected MicroStrategy to be included in Nasdaq-100

Key Takeaways

MicroStrategy is likely to be included in the Nasdaq-100 index, pending classification as a technology company.
ETFs that track the Nasdaq-100 may have to buy MicroStrategy shares if they are included, affecting its stock trading.

Nasdaq is expected to announce the annual reset of the Nasdaq-100 index today, which could include several companies, including MicroStrategy.

According to Bloomberg ETF analyst James Seyffart, MicroStrategy meets several criteria to be included in the Nasdaq-100, including its classification as a technology company based on revenue sources. in.

However, Seyfart was noted that MicroStrategy may not be added as a result of reclassification as a treasury stock. The Nasdaq-100 does not include financial institutions such as banks and insurance companies.

Although MicroStrategy's software business is a small part of its total value – the company's value is now largely tied to its Bitcoin holdings – it is still classified as a software company.

The MicroStrategy Business Classification Indicator could be reclassified, although Seyfart believes that this process has not begun.

It is unclear whether this reclassification will be considered in the future in Nasdaq's decision. But technically, if MicroStrategy maintains its classification at the time of Nasdaq's rebalancing announcement, it has a strong chance of being included.

The annual changes are expected to be announced tonight, usually around 8pm ET, based on last year's timeline of six company additions and six removals.

Impact on MicroStrategy

The Nasdaq-100 Index includes 100 of the largest non-financial companies listed on the Nasdaq stock exchange. This index features prominent companies from various sectors, especially technology, but also includes companies from retail, healthcare and telecommunications.

As such, it is a key benchmark for investors seeking exposure to leading US companies, particularly those driving innovation and growth.

Many mutual funds and ETFs track the Nasdaq-100. Global ETFs that directly track the benchmark manage $451 billion in assets, according to Bloomberg, with the iShares QQQ Trust (QQQ) accounting for about $329 billion.

Nasdaq-100 inclusion may have a significant impact on MicroStrategy's visibility and stock price due to increased demand from these investment funds.

When a company is added to the Nasdaq-100, ETFs that track this index are required to buy shares of that company. That said, if MicroStrategy is added, ETFs like QQQ will be obligated to buy its shares. The income of capital from these ETFs greatly increases the demand for the stock, often leading to an increase in the price of its shares.

Bloomberg Intelligence estimates that MicroStrategy could see a net share purchase of around $2.1 billion if it joins the Nasdaq-100 index.

MicroStrategy shares are trading above $400 after the market opened on Friday, up 2.5% over the past 24 hours, according to Yahoo Finance data.