Is MicroStrategy Set for S&P 500 Inclusion? What You Need to Know

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Rumors are swirling in the financial world that MicroStrategy ($MSTR) may soon join the illustrious ranks of the S&P 500 index. Broker Benchmark suggests that with a few strategic moves, MicroStrategy could meet the criteria for inclusion in this prestigious index, potentially reshaping the company’s future trajectory.

Impending Earnings Report

MicroStrategy, led by CEO Michael Saylor, is set to release its earnings report in just four days. Analysts anticipate a quarterly loss of $0.55 per share. However, adopting new accounting standards could potentially turn that expected loss into a gain of over $300 per share.

MicroStrategy currently ticks almost all the boxes for S&P 500 inclusion, boasting adequate liquidity and market capitalization. However, the missing piece of the puzzle has been consistent positive earnings in quarterly reports, a feat that early adoption of the Financial Accounting Standards Board’s (FASB) new rules could accomplish.

Early Adoption of Accounting Standards

While the FASB’s new accounting rules aren’t slated to take full effect until 2025, companies can adopt them early. MicroStrategy’s decision to embrace these standards ahead of schedule could be a game-changer, potentially paving the way for its inclusion in the S&P 500 index.

MicroStrategy has faced challenges in its earnings reports, with losses recorded in 10 out of the last 14 quarters. However, the company’s proactive approach to adopting new accounting standards suggests a potential shift in this trend. This strategic move could significantly impact MicroStraegy’s valuation and market perception.

Analysts foresee substantial benefits for MicroStrategy if it secures a spot in the S&P 500.

One analyst notes, “Inclusion in the S&P 500 would position MSTR’s stock valuation to receive an ongoing boost from the price-agnostic purchases of its shares resulting from enormous passive inflows.”

This suggests that joining the S&P 500 could unlock a new wave of investment and growth opportunities for MicroStrategy.