Key Takeaways
- Strategy shares fell 7% after MSCI confirmed it will drop the stock from its indexes after Nov. 30.
- The forced selling looks manageable, since the stock already fell when MSCI adopted the rule.
- The bigger cost is losing a steady buyer for the stock Strategy sells to buy bitcoin.
- Bitcoin miner CleanSpark has the operating business MSCI wants, and Strategy investors should watch whether other index providers follow.
Strategy (MSTR) fell 7% this morning after MSCI confirmed late Wednesday that it will drop the company’s Class A shares from its indexes at the Nov. 30 close. Under MSCI’s new rule, a company without substantial operating assets is out.
Bitcoin slipping toward $73,500 is weighing on miners like CleanSpark (CLSK) too. But CleanSpark has the operating business MSCI wants.
In a late-August letter, Executive Chairman Michael Saylor and CEO Phong Le called MSCI’s consultation “discriminatory, arbitrary, and misguided.”
MSCI has a point
Strategy’s software business has hovered around $500 million of revenue a year, and analysts expect little change through 2028:
Nothing in MSCI’s decision touches that business, so I don’t expect these estimates to move. But next to more than $60 billion of bitcoin bought since mid-2020, that’s a rounding error.
CleanSpark’s $814.9 million of bitcoin was about 30% of its $2.7 billion of assets at June 30, against 94.5% at Strategy. It also brought in $138.0 million of revenue in the June quarter and signed a 20-year, $6.6 billion data center lease, so its stock should keep trading on bitcoin and its leases.
TIKR tracks 16 analysts on Strategy. How many say “Buy”?
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The bigger cost is a lost buyer
The forced selling looks manageable. Strategy says MSCI-tracking funds hold about 13 million of its shares, less than a day’s trading. And the stock fell nearly 10% in a day when MSCI adopted the rule in October, so much of it is likely priced in.
What hurts more is losing a dependable buyer for Strategy’s stock sales. Its diluted share count has nearly doubled since late 2024:
In May, management said selling stock to buy bitcoin only pays off when the stock trades at 1.22 times the value of its bitcoin or more. Without index buyers, it’ll be harder for Strategy to win back a premium that size.
The index selling is a one-time hit, and the lost buyer is the lasting damage. Of course, JPMorgan estimated last year that other indexes following MSCI could add $8.8 billion of selling to the up to $2.8 billion from MSCI’s exit.
So what is Strategy stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
