Al Bentley
4 min read
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MSCI has already removed Strategy Inc from its USA and global equity indexes after classifying the business as a non-operating company because of its large Bitcoin holdings. This triggers index-tracking funds to adjust positions and affects how the stock is represented in mainstream benchmarks.
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The reclassification puts fresh attention on Strategy’s reliance on equity issuance to finance Bitcoin purchases. Losing index inclusion can constrain access to passive capital and increase pressure on its funding model compared with traditional software and cloud peers.
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Now the focus turns to how this shift in index eligibility and perceived business profile could reshape Strategy Inc’s broader investment narrative.
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What Is Strategy’s Investment Narrative?
To own Strategy stock, you have to buy into a hybrid story. Part of the appeal is direct exposure to Bitcoin through a listed vehicle. The rest is a software and analytics business that is trying to grow subscription cloud revenue on a relatively modest base of US$495.1m in annual software sales. Recent index removal from MSCI does not change product demand, pricing or competitive position in AI analytics. It does, however, put more scrutiny on how efficiently management can run the software arm and keep losses, currently reflected in a net loss of about US$14.9b, from widening.
The bigger near term swing factor is funding. Strategy has relied heavily on new equity to finance digital asset accumulation, and shareholders have already seen substantial dilution alongside a volatile share price and a 1 year total return that is down 44.1%. MSCI’s move tightens the pool of passive capital that might absorb future issuance. That raises the stakes around execution on software growth, capital intensity of further Bitcoin buys and the firm’s ability to manage higher risk funding without leaning even harder on the stock.
That said, there is one structural pressure point in Strategy’s model that often only becomes obvious when liquidity is tested…
There’s only one way to know the right time to buy, sell or hold Strategy. Head to Simply Wall St’s company report for the latest analysis of Strategy’s Fair Value.
Exploring Other Perspectives
Some of the lowest ranked analysts lean hard into a Bitcoin concentration risk for Strategy. They frame a far more pessimistic path, with revenue assumptions around US$451.6m by 2029 and earnings of just US$52.4m, well below bullish views. These estimates were all set before the MSCI exit, so expectations may shift again.
