(Bloomberg) — MicroStrategy Inc., the dot-com-era software maker whose metamorphosis into a leveraged bet on Bitcoin has transfixed Wall Street, is joining the Nasdaq 100 Index, the benchmark’s overseer said Friday. Software company Palantir Technologies Inc. and Axon Enterprise Inc., a maker of Tasers and police body cameras, will also be added.
Most Read from Bloomberg
Illumina Inc., Super Micro Computer Inc. and Moderna Inc. will be removed from the Nasdaq 100. The changes will be effective prior to market open on Monday, Dec. 23.
The decision to add MicroStrategy, announced late Friday by Nasdaq Global Indexes, represents a major stamp of institutional acceptance for its controversy-courting founder, Michael Saylor, whose disdain for Wall Street convention has helped spur a 500% rally in its shares this year and made him a hero to Bitcoin bulls. The company started out as a maker of enterprise analytics software more than three decades ago but gained renown and became vastly more valuable since it started amassing Bitcoin hand-over-fist in 2020.
Gains averaging more than 40% over the last three months pushed the company’s market value to almost $100 billion, more than about half the Nasdaq 100’s members, satisfying a key prerequisite for membership. With the appreciation has also come extreme volatility — the shares have swung about five times as much as the Nasdaq index over the span — a trait that could add turbulence to the benchmark itself given its likely weighting.
“Adding MicroStrategy offers the possibility for truly increased volatility. Not only is it the most volatile of the newcomers — Palantir is no slouch, by the way — but it is essentially a leveraged play on Bitcoin,” said Steve Sosnick, chief strategist at Interactive Brokers. “Then consider that the Bitcoin is highly correlated with NDX except with more volatility.”
Shares of the Tysons Corner, Virginia-based company have become a major investment story this year by surging more than 500% as it accelerated an unconventional plan to raise capital solely to purchase and hold the cryptocurrency. It has announced multibillion-dollar acquisitions every Monday over the past five weeks, surging along with the token’s price — and raising questions in some circles about the strategy’s sustainability.
MicroStrategy’s inclusion in the index may have bullish implications for Bitcoin itself, which quickly jumped more than 1% after the news was announced. Besides selling convertible bonds, Saylor has raised billions of dollars to fund his crypto buying by issuing fresh stock into the market. Those sales could become easier should index-tracking investors become a near-term source of demand.
