Michael Saylor: Accounting rules coming into effect next year may allow MicroStrategy to meet S&P 500 profitability requirements

PANews reported on December 22 that, according to Barrons, MicroStrategy Chairman Michael Saylor did not make it clear in a recent interview whether the company might be included in the S&P 500, but he said that given the optimistic view on Bitcoin, MicroStrategy will not be included in the S&P 500 next year. Possibly reporting billions of dollars in quarterly net income due to growth in the value of its Bitcoin holdings, accounting rule changes set to take effect in 2025 could allow MicroStrategy to meet profitability requirements to join the S&P 500.

It is reported that MicroStrategy’s traditional software business (its main business before it started buying large amounts of Bitcoin in 2020) is small and may be valued at only about US$1 billion. In addition, the business is in a loss-making state according to GAAP (U.S. Generally Accepted Accounting Principles), which alone makes it difficult to meet the inclusion requirements of the S&P 500 Index. The accounting rules that will take effect soon will adjust the value of the company's Bitcoin holdings from the current low valuation to fair market value and could lead to significant net income growth if the price of Bitcoin increases. However, the S&P Global Index Committee determines S&P 500 membership on an invitation-only basis, reviewing profitability, market capitalization and other factors.