• 24 June, 2024
Market News

MicroStrategy’s Bitcoin Strategy Yields Over $4 Billion in Profits, Eyes S&P 500 Inclusion

MicroStrategy, recognized as the largest corporate holder of Bitcoin, has seen its Bitcoin investment’s value exceed $10 billion, resulting in a profit of over $4 billion. This growth is attributed to Bitcoin’s ascent to nearly $53,000. The firm revealed it holds 190,000 Bitcoins, acquired at an average price of $31,224 per coin, totaling an investment of $5.93 billion. 

MicroStrategy initiated its aggressive Bitcoin accumulation strategy in the second quarter of 2020, consistently purchasing additional bitcoins in subsequent quarters. By December 2023, MicroStrategy reported profits of nearly $2 billion from its Bitcoin investments. Since then, the company’s profits soared to over $4 billion, buoyed by Bitcoin’s impressive rally of more than 20% since the start of 2024. This recent surge in Bitcoin’s price has notably enhanced the value of MicroStrategy’s cryptocurrency portfolio.

Bitcoin’s value peaked at $52,800 early Thursday, propelling MicroStrategy’s holdings to just over the $10 billion mark. However, a slight retreat in Bitcoin’s price to $52,000 was noted at the time of writing. Michael Saylor, MicroStrategy’s co-founder and executive chairman, linked this price surge to the introduction of spot Bitcoin ETFs, which, according to him, have disrupted the supply-demand balance fueled by a decade-long demand for a retail-friendly Bitcoin investment vehicle.

Saylor also announced MicroStrategy’s pivot towards becoming a Bitcoin development company, emphasizing its commitment to enhancing the Bitcoin network and leveraging its position as the world’s leading corporate Bitcoin holder. The company’s ambitious Bitcoin investment strategy and its financial outcomes have sparked discussions around its potential eligibility for inclusion in the S&P 500 index. Following a 46% rally in its stock price over an eight-day period as of February 15, MicroStrategy climbed to the 535th position among the largest publicly listed companies in the United States. 

To qualify for the S&P 500, MicroStrategy must satisfy a range of criteria, including a market cap boost. Currently, with a market cap of $12.1 billion, the company’s stock price would need to increase from $718 to $937 to meet the $15.8 billion threshold required for index eligibility.

The criteria for S&P 500 inclusion not only involve market capitalization but also include profitability metrics, trading volume, and public shareholding requirements. MicroStrategy has reported a positive sum of profits over its last four quarters, including the most recent one, which positions it closer to meeting these stringent requirements. However, final approval for inclusion lies with the S&P’s executive committee, which evaluates companies based on a comprehensive set of standards.

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