TLDR
- Strategy (formerly MicroStrategy) bought 1,955 BTC for $217.4 million between September 2-7, bringing total holdings to 638,460 BTC
- MSTR stock dropped over 2% to around $327 despite Bitcoin climbing above $112,000
- The company was rejected from S&P 500 inclusion last week, with Robinhood, AppLovin, and Emcor selected instead
- Analysts suggest Strategy may never make S&P 500 due to its ETF-like structure and Bitcoin-dependent earnings volatility
- The company funded the purchase by selling 591,606 MSTR shares for $200.5 million
Strategy has made its sixth consecutive weekly Bitcoin purchase, acquiring 1,955 BTC for $217.4 million at an average price of $111,196 per Bitcoin. The purchase occurred between September 2-7, bringing the company’s total Bitcoin holdings to 638,460 BTC.
The company now holds approximately 3% of Bitcoin’s total supply. These holdings were acquired for $41.17 billion at an average price of $73,880 per Bitcoin.
Strategy funded this latest purchase primarily through equity sales. The company raised $200.5 million from selling 591,606 MSTR shares, plus additional funds from STRF and STRK share sales.
This marks another week of the company’s aggressive Bitcoin accumulation strategy. Last week, Strategy announced a purchase of 4,048 BTC for $444 million.
S&P 500 Rejection Creates Uncertainty
The latest purchase comes after Strategy’s failure to gain S&P 500 inclusion last Friday. Despite meeting all criteria for potential inclusion, the index committee selected Robinhood, AppLovin, and Emcor instead.
MSTR stock dropped following the announcement and continues trading lower. The stock currently trades around $327, down from last week’s close of $335.
The rejection occurred despite Strategy’s $94 billion market value. This makes it the largest U.S. company currently excluded from the S&P 500 index.
Chairman Michael Saylor had hinted at the purchase on social media. He posted a picture of the company’s Bitcoin portfolio tracker with the caption “Needs More Orange.”
Speaking on CNBC Monday morning, Saylor said he wasn’t expecting quick S&P 500 inclusion. “This is a brand-new novel concept,” he stated.
The stock performance puzzles some observers given Bitcoin’s strength. Bitcoin climbed above $112,000 Monday, gaining nearly 1% for the day.
Strategy achieved a 25.8% BTC yield year-to-date through its accumulation strategy. The company has maintained this approach despite market volatility.
Structural Concerns May Block Index Entry
Industry analysts suggest Strategy faces fundamental barriers to S&P 500 inclusion. The company’s structure resembles an ETF or closed-end fund rather than a traditional operating business.
S&P Dow Jones Indices specifically excludes ETFs and closed-end funds from major indexes. This policy extends to the S&P 500, Midcap 400, and Small Cap 600.
Strategy’s earnings volatility poses another challenge for index inclusion. The company earned $14.03 billion in Q2, but $14 billion came from unrealized Bitcoin gains.
These earnings fluctuate directly with Bitcoin prices. A period of Bitcoin declines would result in losses that could prevent index inclusion.
The company maintains a software business generating about $500 million annually. However, this revenue stream operates near break-even and remains too small for S&P 500 qualification alone.
Benchmark analyst Mark Palmer believes earnings volatility likely prevented Friday’s inclusion. He remains optimistic about eventual S&P 500 entry after seeing more consistent earnings.
Palmer suggests the index committee wants to see “clean” earnings prints. The committee’s comfort with Strategy’s earnings profile will likely determine future inclusion chances.
Strategy’s Bitcoin-focused business model creates a unique classification challenge. No similar company has previously gained S&P 500 admission.
The index already includes crypto exposure through Coinbase, which was added earlier this year. Coinbase operates as a traditional financial services company rather than a Bitcoin repository.
Strategy stock remains down over 10% for the past month despite Bitcoin’s recent strength. The company continues selling shares to fund Bitcoin purchases, having abandoned an earlier promise to avoid dilution when trading below certain metrics.
