MicroStrategy’s Saylor in talks with MSCI amid index removal threat

MicroStrategy (Nasdaq: MSTR), later rebranded to Strategy, faces new pressure over its long-term market positioning as MSCI reviews whether the company still qualifies for inclusion in several of its major equity benchmarks. 

The decision, expected by Jan. 15, comes as the digital-asset treasury model that once powered Strategy’s rise confronts its largest structural challenge yet.

Related: SEC pushes new crypto rule despite major Wall Street warnings

Bitcoin volatility amplifies Strategy’s equity risk

Strategy positions itself as a digital-asset treasury vehicle, enabling investors to gain Bitcoin exposure through equity markets. 

But as Bitcoin fell from a high near $119,000 to a low of $83,800 this week, the amplified effect on Strategy shares resurfaced.

“The equity is going to be volatile, because the company is built on amplified bitcoin,” Saylor told Reuters. “If bitcoin falls … 30%, 40% then the equity is going to fall more.”

More News:

• Analyst predicts 90% surge for sinking crypto stock
• Popular Tesla investor warns Saylor’s Bitcoin model 'destroys value'
• MicroStrategy stock drops 60% from peak as mNAV approaches 1

MSCI confirms ongoing engagement with Strategy

MSCI said it is evaluating a rule change that would exclude companies “whose business model is to buy cryptocurrencies,” citing concerns that such firms resemble investment funds, which are not eligible for inclusion.

Saylor confirmed that the company is in active discussions with MSCI. 

“We’re engaging in that process,” he said, adding that he is not convinced the projected outflow risk is accurate. 

JPMorgan estimated last month that Strategy could see up to $8.8 billion in outflows if MSCI - and later other index providers - remove the stock.

Saylor publicly dismissed the impact of any removal. “It won’t make any difference, in my opinion,” he told Reuters during an interview on the sidelines of a Binance event in Dubai.

Related: Jim Cramer blames ‘vicious’ market sell-off on Japan, MicroStrategy

A potential multi-index ripple effect

While MSCI is the first major provider to consider excluding Bitcoin-heavy companies, analysts warn the decision could trigger broader index reviews. 

S&P Dow Jones Indices, FTSE Russell and Nasdaq have historically mirrored MSCI’s eligibility shifts, including previous reclassifications that impacted Tesla, Meta and Alibaba across multiple benchmarks.

JPMorgan wrote that exclusion would raise questions about Strategy’s “ability to raise equity and debt,” a critical concern for a company that funds its Bitcoin accumulation through both stock issuance and leverage.

Bitcoin’s downturn has already added pressure. Strategy cut its full-year outlook on Dec. 1, warning of up to $5.5 billion in losses following the asset’s steep November decline - its largest monthly drop since mid-2021.

Mizuho boosts confidence with fresh Outperform call

Mizuho senior analyst Dan Dolev reiterated an Outperform rating and a $484 price target on Strategy after a Dec. 3 Q&A with CFO Andrew Kang. 

The firm noted that Strategy raised $1.44 billion to bolster its cash reserves and secure dividend coverage without selling Bitcoin, while Kang said the company can operate “for years” at current BTC prices and views selling BTC only as a last resort.

Strategy remains leveraged at roughly 1.11×, and Saylor insists the company could survive a 95% Bitcoin drawdown.

But with MSCI’s decision approaching and Bitcoin’s volatility resurfacing, the question for investors is no longer whether Strategy can endure, but whether index providers still view its model as compatible with conventional equity benchmarks.

Related: Billionaire warns largest private gold holder could be insolvent