Strategy faces possible MSCI index removal, threatening billions in outflows
- Strategy (MSTR) is reportedly in talks with MSCI about a possible removal from major equity benchmarks, a decision expected by Jan. 15.
- Removal could lead to outflows of up to $8.8 billion if other index providers follow suit, because the stock is part of many passive investment products.
- The shares are down 39% year-to-date on concerns over its debt and equity issuance programs to accumulate bitcoin at a time when investors are wary of risk assets.
Strategy (MSTR), the largest public holder of Bitcoin, is in talks with index provider MSCI over a possible decision to remove the company from major equity benchmarks.
A decision is expected by Jan. 15, Reuters reported. The outcome could carry significant consequences for the Tysons Corner, Virginia-based company.
JPMorgan analysts estimated last month that a removal could spark outflows of up to $8.8 billion if other index providers follow MSCI’s lead. That’s because Strategy’s inclusion in indices like MSCI USA and MSCI World makes it a part of many passive investment products.
“We're engaging in that process,” Saylor told Reuters when asked about MSCI, and added that he “was not sure” about the accuracy of JPMorgan’s estimates.
Strategy, which has 650,000 BTC on its balance sheet, has been under fire over the last few weeks after the price of the leading cryptocurrency plummeted from an all-time high over $120,000 to as low as $82,000.
While the bitcoin price has recovered to $93,000, still about 26% below the record, critics argue Strategy’s debt and equity issuance to accumulate BTC isn’t sustainable. The company's shares have dropped 37% this year.
Author
CoinDesk Analysis Team
CoinDesk
CoinDesk is the media platform for the next generation of investors exploring how cryptocurrencies and digital assets are contributing to the evolution of the global financial system.
