TLDR
- Strategy remains a potential candidate for S&P 500 inclusion in December despite its falling share price.
- The company’s stock declined from $474 to $207 following the recent Bitcoin crash.
- Matrixport analysts believe Strategy’s shares are now trading at a more reasonable value compared to Bitcoin.
- Crypto firm 10X Research estimated a 70 percent chance of Strategy joining the S&P 500 this year.
- S&P Global Ratings gave Strategy a B minus credit rating placing it in speculative-grade territory.
Strategy’s stock continues to face pressure following the recent Bitcoin crash, but analysts maintain confidence in its potential S&P 500 entry. The crypto market correction impacted investor sentiment, yet researchers say the Strategy remains financially stable despite NAV compression. The company recently purchased 8,178 Bitcoin worth $835 million, reinforcing its treasury commitment.
Strategy Still a Candidate for S&P 500 Inclusion
Matrixport reported that Strategy could still join the S&P 500 by December despite its share price decline. The company’s stock dropped from a high of $474 to $207 during the ongoing correction. Researchers argue its valuation is now more aligned with Bitcoin’s price movement.
Matrixport analysts stated, “The shares now appear relatively cheap when overlaid with Bitcoin.” They do not expect forced liquidation. Instead, they said current pressure stems from investors who purchased at inflated NAVs.
Meanwhile, crypto firm 10X Research gave Strategy a 70% chance of being added to the index this year. They based this forecast on current market conditions and Bitcoin’s correlation with Strategy’s share price. Analysts emphasized timing and valuation remain crucial for new and existing investors.
Strategy Receives Junk Credit Rating But Holds Firm
S&P Global Ratings assigned Strategy a “B-” credit score, categorizing it within speculative-grade debt, also known as junk bonds. It marked the first such rating for a Bitcoin-treasury-focused firm. This rating establishes a benchmark for evaluating other companies that hold Bitcoin in their treasuries.
Although concerns about creditworthiness persist, Strategy’s chairman, Michael Saylor, remains optimistic. He told Fox Business, “The company is engineered to take an 80 to 90% drawdown and keep on ticking.” This reflects a strong commitment to the company’s Bitcoin strategy.
The rating does not affect Strategy’s operations or investment approach, which continue to follow its treasury-based model. Analysts agree the current price correction does not threaten Strategy’s core business. However, pressure persists on holders who bought shares above NAV.
Smaller Bitcoin Treasuries Face Growing Constraints
Other companies with smaller digital asset treasuries experienced mNAV drops below critical thresholds due to the Bitcoin crash. These include Bitmine, Metaplanet (MTPLF), Sharplink Gaming (SBET), Upexi (UPXI), and DeFi Development Corp (DFDV). With mNAV below 1, their ability to raise funds becomes limited.
The mNAV ratio compares enterprise value to the company’s Bitcoin holdings. If it falls below 1, issuing new shares becomes challenging. This directly impacts expansion plans and limits further Bitcoin purchases.
Strategy’s mNAV also fell below this threshold, but analysts do not expect this to affect operations. Unlike smaller DATs, Strategy retains institutional confidence due to its larger treasury base. The recent $835 million Bitcoin purchase further distances it from peers.
Despite market challenges, Strategy remains committed to expanding its holdings. The latest buy is larger than its previous monthly average of 400–500 BTC. This move reinforces its position as the world’s largest corporate holder of Bitcoin.
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