MicroStrategy Eyes S&P 500 Entry: What You Need to Know

MicroStrategy might be added to the S&P 500 if it adopts new accounting rules, which could turn their expected loss into a gain.
This would be a big deal for MicroStrategy because it would attract more investment.
MicroStrategy has historically lost money, but adopting the new rules could change that.

Rumors are swirling in the financial world that MicroStrategy ($MSTR) may soon join the illustrious ranks of the S&P 500 index. Broker Benchmark suggests that with a few strategic moves, MicroStrategy could meet the criteria for inclusion in this prestigious index, potentially reshaping the company’s future trajectory.

Impending Earnings Report

With just four days until MicroStrategy reveals its earnings report, all eyes are on the horizon. Analysts anticipate a quarterly loss of $0.55 per share. However, there’s a tantalizing possibility: adopting new accounting standards could turn this expected loss into a gain of over $300 per share.

Cracking the Code

MicroStrategy currently ticks nearly all the boxes for S&P 500 inclusion, boasting strong liquidity and market capitalization. Yet, the missing piece is a consistent streak of positive earnings. But there’s hope – embracing the Financial Accounting Standards Board’s (FASB) new rules could make this possible.

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Early Adoption as a Strategic Move

Although the FASB’s new accounting norms won’t be mandatory until 2025, companies can adopt them early. MicroStrategy’s decision to do so could be a game-changer, potentially paving the way to S&P 500 inclusion.

MicroStrategy has faced earnings hurdles, with losses in 10 out of the last 14 quarters. Yet, its proactive stance on new accounting standards suggests a potential turnaround. This could significantly impact MicroStrategy’s valuation and market perception.

The Future is Bright!

Analysts foresee substantial benefits for MicroStrategy if it secures a spot in the S&P 500.

“Inclusion in the S&P 500 would position MSTR’s stock valuation to receive an ongoing boost from the price-agnostic purchases of its shares resulting from enormous passive inflows.”

This suggests that joining the S&P 500 could unlock a new wave of investment and growth opportunities for MicroStrategy.

Do you think MicroStrategy’s gamble on new accounting rules will pay off?