What will happen to MSTR if it is included in QQQ

Summary

In this video, Forest Stevens discusses the potential impact of MicroStrategy’s inclusion in the NASDAQ 100 index. He explains how this could drive significant buying pressure from ETFs and institutional investors, boosting the company’s stock price. The video highlights how this would enhance MicroStrategy’s Bitcoin acquisition strategy and increase its credibility in the markets. Despite potential short-term volatility, the presenter is bullish on the long-term benefits of NASDAQ 100 inclusion, as it would provide increased stability, legitimacy, and access to better financing options for MicroStrategy’s Bitcoin-backed business model.

Takeaways

• 😀 MicroStrategy is a business intelligence company that holds the largest amount of Bitcoin of any public company, which is central to their growth strategy.
• 📈 The NASDAQ 100 index is composed of the 100 largest non-financial companies listed on the NASDAQ, with rebalancing happening annually.
• 💡 MicroStrategy qualifies for inclusion in the NASDAQ 100 based on its market cap, ranking it within the top 51 companies.
• 💰 If MicroStrategy is added to the NASDAQ 100, it could trigger significant buying pressure from ETFs and funds that track the index, resulting in a $1 billion inflow.
• ⚖️ The buying pressure from ETFs and rebalancing funds will likely increase MicroStrategy's stock price, although the exact impact depends on how shares are acquired.
• 🚀 MicroStrategy’s Bitcoin strategy is key to their long-term growth. As Bitcoin rises in value, so does their asset base, which can lead to increased institutional interest.
• 🏦 Inclusion in the NASDAQ 100 would provide MicroStrategy with greater legitimacy and make it easier for them to issue rated bonds, lowering borrowing costs.
• 📊 The quarterly rebalancing of ETFs tracking the NASDAQ 100 will likely continue to apply buying pressure on MicroStrategy stock, providing more stability in the market.
• 🔄 MicroStrategy’s ongoing use of dilution (issuing new shares) to fund Bitcoin acquisitions could become more efficient if their stock price rises due to NASDAQ 100 inclusion.
• 💎 Bitcoin is viewed as a more valuable asset than traditional fiat currency for MicroStrategy, positioning them for long-term growth as Bitcoin adoption increases globally.
• 📅 Even if MicroStrategy is not added to the NASDAQ 100, their strategy of accumulating Bitcoin will continue to make them a leader in the tech and crypto space.

Q & A

What is the NASDAQ 100 index, and how does it relate to MicroStrategy?

The NASDAQ 100 is an index that includes the 100 largest non-financial companies listed on the NASDAQ stock exchange. MicroStrategy’s inclusion in the NASDAQ 100 is significant because it would increase the company’s visibility and credibility in the market, especially for investors tracking this major index.

How would the inclusion of MicroStrategy in the NASDAQ 100 impact its stock price?

Inclusion in the NASDAQ 100 would likely cause an increase in MicroStrategy's stock price due to the need for various ETFs and funds that track the index to buy MicroStrategy shares. These funds must adjust their portfolios to reflect the inclusion, leading to buying pressure.

What is the role of ETFs like QQQ in driving buying pressure for MicroStrategy?

ETFs that track the NASDAQ 100, such as QQQ, will be required to buy shares of MicroStrategy once it is included in the index. This buying pressure comes from the fact that these funds must replicate the composition of the NASDAQ 100 index, and adding MicroStrategy will necessitate purchasing a significant amount of its shares.

How does the timing of the NASDAQ 100 rebalancing affect MicroStrategy’s stock price?

The NASDAQ 100 rebalance happens annually, but ETF funds adjust their holdings quarterly. The inclusion announcement on December 14th and the official rebalancing on December 20th could lead to a short-term surge in MicroStrategy's stock price due to concentrated buying pressure in a brief period.

What is the significance of MicroStrategy's business model for its inclusion in the NASDAQ 100?

MicroStrategy’s business model, which is primarily focused on software and business intelligence, rather than being a financial company, makes it eligible for inclusion in the NASDAQ 100. Despite its involvement in Bitcoin, the company's core revenue comes from its software, which meets the NASDAQ's criteria.

How do OTC desks or dark pools influence the buying pressure for MicroStrategy?

OTC desks or dark pools allow large-scale institutional investors to buy and sell shares without impacting the public market price. These mechanisms could help facilitate some of the required purchases of MicroStrategy shares without causing immediate price fluctuations in the open market.

What is the potential impact of MicroStrategy’s share issuance (ATM strategy) on its stock price?

MicroStrategy has been issuing new shares through an At-the-Market (ATM) offering to raise funds for buying more Bitcoin. If the company is included in the NASDAQ 100, it may not be able to issue shares during the rebalancing period, which could reduce selling pressure and allow the stock price to rise due to the influx of buying from ETFs.

Why is the addition of MicroStrategy to the NASDAQ 100 seen as a positive for Bitcoin?

The addition of MicroStrategy to the NASDAQ 100 increases its exposure to passive investors who track the index, indirectly increasing their exposure to Bitcoin. As MicroStrategy continues to accumulate Bitcoin, the rise in its stock price could mean more capital available to buy even more Bitcoin, benefiting the broader Bitcoin market.

What is the long-term impact of being included in the NASDAQ 100 for MicroStrategy’s future growth?

Being included in the NASDAQ 100 would not only provide MicroStrategy with greater legitimacy but also make it more attractive to institutional investors. This could lead to more capital for Bitcoin acquisitions, as well as greater access to capital markets at more favorable terms, fostering long-term growth.

What role does the increased stability in MicroStrategy’s stock price play after NASDAQ 100 inclusion?

Inclusion in the NASDAQ 100 would bring more stability to MicroStrategy’s stock price, as funds tracking the NASDAQ index would hold the stock passively. This reduces volatility compared to active traders and could lead to a more predictable stock price, benefiting the company in the long run.