Strategy (formerly known as MicroStrategy) shares (MSTR) fell over 6% in premarket trading on Thursday after MSCI, the index provider, announced it will remove MSTR from its indices in December.
The decision could add to pressure on the world’s largest corporate bitcoin holder by triggering selling from passive funds that track MSCI benchmarks.
The exclusion also comes as Strategy contends with a prolonged decline in cryptocurrency prices.
MSCI exclusion puts passive fund holdings at risk
MSCI confirmed on Wednesday that Strategy will be removed from its benchmark equity indexes as part of its November 2026 review.
The decision will take effect from November 30.
The index provider has introduced revised eligibility rules for companies without substantial operating assets.
Under the new methodology, such firms are classified as non-operating companies and become ineligible for inclusion in its global indexes.
The move will remove Strategy’s Class A shares from the MSCI USA Large Cap Index, potentially prompting passive funds tracking the benchmark to sell their holdings.
Investors tracking indexes are generally required to adjust their portfolios when constituents are removed.
As a result, Strategy could face additional selling pressure when the changes take effect.
Other index providers could also adopt similar rules, potentially extending the impact beyond MSCI’s benchmarks.
Strategy challenges MSCI’s decision
Founded by Michael Saylor, Strategy operates a bitcoin-treasury model, raising capital through share and debt sales to purchase the cryptocurrency.
According to an SEC filing, the company holds more than 850,000 bitcoin, acquired at an aggregate purchase price of more than $64 billion.
Strategy had flagged the possibility of exclusion in its third-quarter SEC filing in October, saying it anticipated being removed under MSCI’s revised criteria.
The company has also challenged the index provider’s proposal.
In an August letter to MSCI, Strategy described the rules as “discriminatory, arbitrary and misguided” and called them a pretext for targeting digital asset treasury companies.
Strategy has argued that the exclusion would not have a meaningful impact on its business, noting that funds tracking MSCI indexes hold 3.1% of its shares.
It has also encouraged shareholders to contact MSCI and oppose the decision.
MSCI’s review has affected other companies with substantial cryptocurrency or holding-company exposure.
The provider also removed Tokyo-listed Metaplanet and the UK’s Yellow Cake, while placing nearly two dozen crypto- and holding-focused companies on an exclusion watchlist.
Bitcoin slump adds to pressure on MSTR shares
The index decision comes as Strategy shares face pressure from a prolonged decline in bitcoin prices.
The company has accumulated more than $60 billion worth of bitcoin since mid-2020, relying heavily on issuing common and preferred stock at a premium to its net asset value to finance purchases.
However, the model could face additional challenges if index-tracking funds reduce their exposure to the stock.
Bitcoin has also weakened amid renewed inflation concerns and the failure of Congress to pass the CLARITY Act, a key cryptocurrency regulation bill.
Strategy shares have fallen about 22% this year, while bitcoin has declined around 17%.
The stock is also down 45% over the past year, compared with a 28% decline in bitcoin over the same period.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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