MicroStrategy’s S&P 500 Potential Hinges on Bitcoin’s Q1 Performance and FASB Rule Change
MicroStrategy (MSTR) is closing in on eligibility for S&P 500 inclusion by mid-2025, with the last key requirement being positive GAAP net income over the trailing 12 months. While the company has largely met all other criteria for the index, its Q1 2025 earnings need to make up for past losses to complete the final step toward inclusion.
The catalyst for this potential achievement is a recent update to the Financial Accounting Standards Board (FASB) rules, which now require companies to account for digital assets like Bitcoin (BTC) at their fair market value. Under the previous standards, companies like MicroStrategy were forced to mark down their Bitcoin holdings based on the lowest value during a period, which resulted in significant impairment losses, such as the $1 billion loss in Q4 2024, when Bitcoin’s market value was around $94,000, but MSTR was required to value its BTC at just $16,000.
Now, with the new FASB rule in place, any rise in Bitcoin’s price will directly boost MicroStrategy’s reported earnings, rather than being absorbed by depreciation, which could help the firm meet the trailing 12-month earnings threshold.
To qualify for the S&P 500, Bitcoin’s price needs to close above $96,337 by March 31, 2025, according to Richard Hass’s analysis. With MicroStrategy holding 478,740 BTC, this price would enable the company to generate the required positive earnings to offset its past losses and position itself for S&P 500 inclusion.
Industry experts like Mark Palmer from Benchmark believe MicroStrategy’s strong Bitcoin strategy and adherence to the updated FASB guidance put it in a favorable position for S&P 500 inclusion. Palmer noted that the company’s consistent performance over the past four years and its innovative approach to Bitcoin give it a compelling case for being added to the index.
For Palmer, inclusion in the S&P 500 would be a powerful validation of MicroStrategy’s Bitcoin strategy, particularly as it would ensure that S&P 500 index funds hold MSTR shares, providing broad exposure to Bitcoin to investors.
