MSCI, the index provider behind widely-tracked benchmarks like MSCI World and MSCI Emerging Markets, approved new rules on Thursday that could remove companies whose primary value derives from holding assets rather than operating businesses. MicroStrategy has been identified as a potential exclusion candidate.
The index provider's concern centers on companies where asset holdings dominate the business model. While MicroStrategy continues to sell software, its Bitcoin holdings now represent a substantial portion of its balance sheet. MSCI's new evaluation criteria will assess operating assets, business cash flow, and reliance on external financing.
MicroStrategy disputed the characterization, stating in its response that "we believe the proposal is misguided."
Potential Market Impact
If MicroStrategy is excluded from MSCI indexes, investment funds tracking those benchmarks would likely sell shares during rebalancing, creating selling pressure independent of Bitcoin's price or investor sentiment about the company.
MicroStrategy estimates that MSCI-linked funds hold approximately 13 million shares, representing around 3.1% of its basic shares outstanding. The company argues this figure is less than typical daily trading volume, suggesting other investors could absorb the shares.
On Thursday, MSTR stock rose 5.62% to close at $151.29, though this movement occurred before MSCI's announcement after market close.
Timeline and Scope
MSCI will publish its list of affected companies on November 11, with the new rules taking effect after November 30. Existing index constituents will be protected by a two-annual-filing test before removal.
Exclusion would not delist MicroStrategy from Nasdaq or force the company to sell its Bitcoin holdings. However, the longer-term risk involves weaker demand for MSTR shares, which could complicate future fundraising for additional Bitcoin purchases.
Japan's Metaplanet and UK uranium holder Yellow Cake were also flagged in MSCI's earlier simulation, while Ethereum treasury firm SharpLink could enter a watchlist.
