The strategy may be considered for S&P 500 inclusion in June if Bitcoin ends Q1 above $96K.

MicroStrategy Inches Closer to S&P 500 with Bitcoin Holdings and FASB Rule Change

MicroStrategy (MSTR) is edging closer to being included in the S&P 500 index, with June 20 marking a potential milestone for the company. However, there is one crucial factor that still needs to be achieved: positive GAAP net income over the trailing 12 months.

At present, MSTR meets all other S&P 500 eligibility requirements but still faces the hurdle of offsetting prior quarter losses with strong Q1 2025 earnings. This challenge has become more manageable thanks to the Financial Accounting Standards Board (FASB) rule change, which now mandates companies to report their bitcoin holdings at fair value, meaning fluctuations in the cryptocurrency’s price will directly affect their bottom lines.

Before this change, businesses were required to account for bitcoin at the lowest price during a given period, which led to large impairment losses. For instance, in Q4 2024, MSTR valued its bitcoin at below $16,000 per token, resulting in a $1 billion impairment despite Bitcoin closing the year at $94,000.

As Richard Hass noted in his analysis on X, MSTR needs Bitcoin to reach at least $96,337 by the end of Q1 2025 to meet the positive trailing 12-month earnings requirement and qualify for the S&P 500. Given that MSTR holds 478,740 BTC, achieving this price point would allow the company to offset the $671 million loss in Q4 2024 and secure positive earnings.

According to Benchmark analyst Mark Palmer, if Bitcoin prices remain strong and MSTR continues to accumulate more digital assets, S&P 500 inclusion is highly achievable. Palmer further emphasized that the adoption of the new FASB accounting rule bolsters MSTR’s case for inclusion, noting, “Given MSTR’s superior performance relative to all current S&P 500 constituents over the last four years, it would be surprising if the company was excluded from the index.”

While joining the Nasdaq-100 was a significant accomplishment for MSTR, Palmer views S&P 500 inclusion as the ultimate validation of the company’s Bitcoin strategy. “Being part of the S&P 500 would mean that all index funds tracking the S&P 500 would hold MSTR shares, effectively providing indirect exposure to Bitcoin for many investors,” he added.