MicroStrategy - Reuters
NEW YORK: MicroStrategy Inc, the dot-com-era software maker whose metamorphosis into a leveraged bet on bitcoin has transfixed Wall Street, is joining the Nasdaq 100 Index, the benchmark’s overseer says.
Software company Palantir Technologies Inc and Axon Enterprise Inc, a maker of Tasers and police body cameras, will also be added.
Meanwhile, Illumina Inc, Super Micro Computer Inc and Moderna Inc will be removed from the Nasdaq 100.
The changes will be effective prior to market open on Monday, Dec 23.
Being chosen for the widely followed tech benchmark is a milestone for MicroStrategy’s controversy-courting co-founder Michael Saylor, and cryptocurrency proponents alike.
MicroStrategy, which started out as a maker of enterprise analytics software, has gained renown and become vastly more valuable since it started amassing bitcoin hand-over-fist in 2020.
Gains averaging more than 40% over three straight months pushed the company’s market value to almost US$100bil, more than about half the Nasdaq 100’s members, satisfying a key prerequisite for membership.
Shares of the Tysons Corner, Virginia-based company have become a major investment story this year by surging more than 500% as it accelerated an unconventional plan to raise capital solely to purchase and hold the cryptocurrency.
It has announced multi-billion-US dollar acquisitions every Monday over the past five weeks, surging along with the token’s price – and raising questions in some circles about the strategy’s sustainability.
MicroStrategy’s inclusion in the index may have bullish implications for bitcoin itself, though the connection is tenuous.
Besides selling convertible bonds, Saylor has raised billions of US dollars to fund his crypto buying by issuing fresh stock into the market. Those sales could become easier should index-tracking investors become a near-term source of demand.
MicroStrategy posted a third consecutive quarterly loss after taking an impairment charge against the value of its roughly US$18bil stockpile of the cryptocurrency. Third-quarter revenue from its software business fell 10% below forecasts.
Palantir’s inclusion highlights the tailwinds from artificial intelligence (AI), which pushed the stock to a blistering 343% rally this year.
It is also another milestone for a company that makes data analysis tools for companies and governments after being added to the S&P 500 in September.
Co-founded by billionaire Peter Thiel, the company reported better-than-expected quarterly revenue for the third quarter and raised its forecast for operating income in the current period, citing high demand in the United States for its AI software.
The Nasdaq 100 comprises the largest non-financial companies listed on the Nasdaq stock exchange.
There is no minimum market capitalisation requirement to be eligible for inclusion, but stocks must have an average daily trading volume of at least 200,000 shares, among other criteria.
Joining the index can benefit a company by providing increased equity-trading liquidity, a lower cost of capital and heightened visibility from investors.
Furthermore, a spot in the coveted Nasdaq 100 boosts a firm’s investor profile and adds to trading liquidity – factors that can potentially propel a company’s stock price. — Bloomberg
