Michael Saylor’s MicroStrategy (MSTR), which trades as Strategy, has a high chance of qualifying for the S&P 500 as long as Bitcoin doesn’t drop more than 10% before the end of the second quarter, an analyst says.
“I believe there is about a 91% chance of MSTR qualifying for the S&P 500 in Q2,” financial analyst Jeff Walton said in a video on Tuesday.
Walton explained that for this to happen, Bitcoin must not fall below $95,240 before June 30. He explained that if it drops below that, Strategy, which has the largest Bitcoinholdingsamong public companies at 592,345 Bitcoin, will not have “have the earnings in Q2 be more than the last three quarters combined.”
Walton explained that to be eligible for S&P 500 inclusion, a company must post positive total earnings across the past four quarters. Strategy has posted net losses in the past three quarters.
The S&P 500 is an index that tracks the stock prices of the 500 largest publicly traded companies in the US.
On Jan. 1, Strategy began applying accounting rule ASU 2023-08, which mandates that Bitcoin holdings be revalued at fair market value, with any gains or losses reflected in net income (or loss) each reporting period.
Walton bases his forecast on Bitcoin trading at $106,044 when he published his video and on the historical odds of a 10% Bitcoin drop over six days since Sept. 17, 2014. With the video released on Tuesday, six days remain in Q2, ending next Monday.
“Going back to September 17, 2014, over any 6-day period, the price of Bitcoin has dropped more than 10% 343 times; of those other 6-day periods, it has been 3,585 where it hasn’t dropped below 10%,” he explained.