‘Bias against bitcoin’: Analysts compare Strategy’s S&P 500 exclusion to previous Tesla, Facebook snubs

Strategy, the software company turned corporate bitcoin treasury, was not included in the latest rebalancing of the S&P 500 index, a move Wall Street analysts liken to previous snubs like Tesla and Meta (formerly Facebook). Instead, AppLovin, Emcor, and Robinhood will replace Caesars Entertainment, MarketAxess, and Enphase Energy later this month.

The S&P tracks the financial performance of 500 leading companies traded in the United States. Index funds and institutional investors that track the index are forced to buy the company’s stock to rebalance their portfolios, which typically drives up trading volume and boosts liquidity. Of note, Coinbase Global (COIN) in May became the first pure-play crypto company to be added to the S&P 500 index.

Benchmark analysts recently noted Strategy’s stock (ticker MSTR) met all criteria needed, but its bitcoin holdings may have scared off the index committee. The company’s earnings profile is “unusually sensitive” to bitcoin mark-to-market swings, which can translate to multi-billion-dollar GAAP volatility, they said.

“In the short run, that means no tailwind for MSTR from passive flows into its stock starting later this month,” Benchmark wrote Monday. “In the long run, the omission says less about MSTR’s business or its balance sheet than it does about the index committee’s discretion and their evolving comfort level with bitcoin-centric corporate models, in our view.”

Strategy owns more than 638,00 BTC and has inspired a massive wave of so-called digital asset treasuries, or DATs. The cumulative bitcoin holdings from these DATs crossed 1 million BTC last week.

“Regardless of index inclusion, Strategy continues stacking bitcoins faster than corresponding liabilities,” TD Cowen analysts wrote Monday in a note to clients. “That its actively-managed balance sheet should trade at a premium to underlying bitcoin value seems obvious to us, to the extent bitcoin becomes increasingly integrated into global finance. A bias against Strategy is a bias against bitcoin, in our view.”

TD Cowen has a “buy” rating and $640 price target on MSTR. The analysts weren’t surprised or deterred by the news: “Inclusion was never central to our investment thesis, though it remains a potential positive catalyst,” they wrote.

Tesla unexpectedly missed the cut for the S&P 500 in September 2020, only for it to be announced for inclusion two months later, the analysts noted. After its 2012 IPO, Facebook quickly grew into one of the largest publicly traded companies, but concerns about its governance and Mark Zuckerberg’s concentrated voting power led the index committee to wait until December 2013. Robinhood was also passed over last summer.

“These precedents show a common pattern: companies that are clearly eligible for the S&P 500 but initially excluded usually face concerns about volatility, governance, or index balance rather than outright disqualification,” according to Benchmark. “Time and performance often resolve those concerns. MSTR’s absence from the September rebalancing list is best understood in this context.”

They reiterated a “buy” rating and $705 price target on the stock.

Strategy’s stock closed Friday’s session with a market capitalization north of $94 billion, according to The Block’s MSTR price data, and remains one of the largest companies not in the index.

With Coinbase’s addition in May and Robinhood’s this month, “the committee may simply be calibrating which crypto-related business models they are comfortable hard-coding into the benchmark,” Benchmark concluded.

© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.