Shares of Strategy (MSTR) fell 6% on Friday as investors weighed the potential removal of the Bitcoin treasury company from MSCI's global equity indexes, even as Bitcoin prices climbed. The decline underscores that factors beyond cryptocurrency prices—such as index inclusion and financing costs—can sway investor sentiment toward the company.
MSCI announced Thursday that non-operating companies would be ineligible for its Global Investable Market Indexes starting November 30. The index provider plans to publish the final list of affected companies on November 11. Strategy and Japan's Metaplanet are among the companies potentially facing removal, with SharpLink and several other crypto treasury firms on a watchlist.
The policy follows a review MSCI began last year into whether digital asset treasury companies resemble investment funds, which are already excluded from its indexes. MSCI deferred its original proposal in January before broadening the review to cover non-operating companies more generally.
The potential exclusion matters because passive funds tracking MSCI benchmarks are required to hold constituent stocks. Strategy previously warned that removal could lead to $2.8 billion worth of its shares being liquidated. However, the company argued that funds tracking MSCI's Global Investable Market Indexes held just 3.1% of its outstanding shares, potentially limiting the direct impact.
In a statement on Friday, Strategy disputed MSCI's proposed classification, saying, “We believe the proposal is misguided.” The company also argued that MSCI's distinction between operating and non-operating companies was undefined and lacked a basis in US GAAP, IFRS, or recognized legal frameworks.
Separately, Strategy's board declared daily cash dividends on its STRC preferred stock for each calendar day in November, subject to shareholder approval and the effectiveness of related amendments. The annualized dividend rate will remain at 12%. Management said it would continue recommending that rate until STRC demonstrates “sustained, healthy trading near $100 per share.” Payments are scheduled to begin on November 2, with each dividend payable on the business day following its record date, according to a regulatory filing.
STRC is one of Strategy's key fundraising instruments for Bitcoin purchases. Daily dividend payments could help make the preferred stock more attractive to investors and support trading around its $100 par value. STRC was down 0.2% at $99.33.
Strategy added 250 Bitcoin for $21.5 million last week, bringing its total holdings to 848,250 BTC. During the week ending October 4, the company repurchased $176 million worth of STRC, spending more than six times as much on the buybacks as on its $28 million in Bitcoin purchases. The company introduced a capital framework on June 29 that allows it to sell Bitcoin to fund dividend payments, and it raised STRC's annual dividend rate to 12% at that time.
Strategy's business model relies on raising capital through stock and debt sales to acquire Bitcoin. While that approach has made the company a major proxy for cryptocurrency exposure in equity markets, its shares remain sensitive to financing conditions and index-related developments. Index-related risks like MSCI's proposed exclusion are closely watched by traders who follow stock reactions through top online trading platforms.
This article is for informational purposes only and does not constitute financial advice.
