Strategy Loses MSCI Index Spot as Bitcoin Drops
Strategy faces potential index outflows and funding pressures as MSCI drops the firm from its equity indexes and Bitcoin trades below its average acquisition cost.
Strategy trades at $111.62, facing dual pressures from index removal and declining cryptocurrency valuations, according to 24/7 Wall St. The company, which pairs a legacy MicroStrategy analytics software business with a massive corporate treasury, held 848,517 Bitcoin at its last quarterly report.
Index Removal and Outflows
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MSCI announced it will delete Strategy from its equity indexes under new rules for non-operating companies, effective at month-end. Strategy had previously estimated that the removal could cause approximately $2.8 billion in selling, while JPMorgan Chase estimated potential outflows of up to $8.8 billion if other index providers follow suit. Shares fell 22.07% over the past month, trailing the S&P 500.
Treasury Valuation and Funding Engine
Bitcoin trades at $65,415, sitting below the company's average cost of about $75,456 per coin across 850,364 Bitcoin. A shrinking premium over digital asset values makes issuing new shares less attractive. However, the firm maintains $5.07 billion in USD assets, which covers 3.4 years of dividends and interest obligations, allowing the company time to absorb market volatility.
Key facts
- Strategy shares trade at $111.62 with a price-to-book ratio of 0.852.
- MSCI will remove Strategy from its equity indexes effective at month-end.
- Bitcoin trades at $65,415, below the company's average cost of about $75,456.
- USD assets of $5.07 billion cover 3.4 years of dividends and interest obligations.
Source: news.google.com
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