The Nasdaq Exchange announced its annual reshuffle of its top 100 non-financial companies by market capitalization, adding MicroStrategy to the list for the first time. The rise in MicroStrategy's stock price, supported by Bitcoin's strong performance, has inflated its market value and made it eligible for inclusion. MicroStrategy shares will be exposed to passive investment opportunities through inclusion in Invesco's QQQ and other ETFs that invest in top companies on the Nasdaq.
The Nasdaq 100 Index tracks the 100 largest companies on the Nasdaq exchange. The covered companies typically receive passive capital flows from popular ETFs.
With a market capitalization of $97.94 billion, MicroStrategy is the 40th largest company on the Nasdaq exchange. This is mainly due to the huge Bitcoin treasury. The company's stock price has increased 505% since the beginning of the year, and its market capitalization has ballooned from about $15 billion on January 2, 2024 to its current value.
MicroStrategy stock price rise
MicroStrategy's incredible stock price rise was driven by the company's Bitcoin buying activity spanning from August 2020 to December 2024, turning the company into a quasi-Bitcoin ETF.
The company spent a total of $23.41 billion on Bitcoin at an average price of $58,200, primarily through bond issuance. Its Bitcoin stash is worth $42 billion at market value at the time of publication.
Increase exposure to investors
MSTR's addition to the NAS100 will expose it to more investors and funds that invest in the Nasdaq index. The largest fund to do this is Invesco's QQQ Trust, with $352 billion in assets under management, but other funds with billions of dollars also invest in NAS 100 companies, such as iShares Nasdaq 100 UCITSETF.
However, it is important to note that not all companies in the Nasdaq 100 have the same weight. For example, Invesco's QQQ ETF has approximately 53.1% of its portfolio allocated to the top 10 companies on the Nasdaq exchange, with the remainder allocated to 90 other companies.
Nevertheless, 0.1% of the $352 billion pie remains significant.
It's not all positive news
The Nasdaq's annual rebalancing includes microstrategies, but the criteria by which companies are included in the index is the main source of market value.
MicroStrategy remains a business intelligence technology and solutions provider, but if most of its value comes from its Bitcoin holdings, it could be reclassified as a financial company and removed from the Nasdaq 100.
Bitcoin is trading at $102,800 at the time of publication, but the Nasdaq rebalance will take effect on December 23rd.
