MicroStrategy to join Nasdaq 100, QQQ ETF following 500% rally this year

Reported by The Block: MicroStrategy will officially join the Nasdaq-100 index, largely made up of technology companies, off the back of its stock’s nearly 500% year-to-date rally in price.

The largest corporate owner of Bitcoin, MSTR will join the index on Dec. 23 alongside data firm Palantir and taser maker Axon Enterprise, replacing biotech stocks Moderna and Illumina and server producer Super Micro Computer.

Several large ETFs will then buy the stock, including the popularly-traded QQQ ETF, leading to over $2 billion in buys, according to one analyst.

MicroStrategy (MSTR), the enterprise software company that has increasingly become a stock market proxy play on Bitcoin 
BTC +3.14%
, will enter the Nasdaq 100 on December 23. Its founder, Michael Saylor, has made use of a "flywheel effect" to accumulate massive amounts of Bitcoin, making MicroStrategy the largest corporate holder of the cryptocurrency.

MSTR's inclusion in the tech-heavy Nasdaq 100 index on December 23, alongside data firm Palantir and taser manufacturer Axon Enterprise, means the company will also be bought by several large exchange-traded funds, including the highly-traded QQQ ETF. Bloomberg ETF analyst James Seyffart predicted ETFs would buy at least $2.1 billion in MSTR shares upon the stock's inclusion in the index.

MSTR's market capitalization, currently about $98 billion, is significantly higher than the value of its 423,650 bitcoin worth slightly less than $43 billion at current prices. The company has bought 197,150 bitcoin since Sep. 12, significantly adding to its position while pushing its cost basis higher.

Following its inclusion in the Nasdaq 100, the company will likely set its sights on inclusion in the S&P 500 index in 2025, Bernstein analysts have said. However, joining the index may be more difficult given the company's lack of profit on its enterprise software business, which has increasingly fallen to the wayside as executive chairman Saylor's Bitcoin strategy has become the firm's core activity.

The stock's inclusion in the Nasdaq index comes as a result of the index's yearly rebalancing which is based largely on companies' market capitalizations on the last trading day in November, though other factors apply.