Strategy (MSTR) shares tumbled more than 6% in premarket trading on Thursday after MSCI, the index provider, announced it will remove the company from its benchmark equity indexes in late November. The decision threatens to trigger selling from passive funds that track MSCI benchmarks, adding to pressure on the world's largest corporate bitcoin holder.
MSCI confirmed on Wednesday that Strategy will be removed from its global indexes as part of its November 2026 review, effective November 30. The move follows revised eligibility rules that classify companies without substantial operating assets as non-operating and therefore ineligible for inclusion. Strategy's Class A shares will be dropped from the MSCI USA Large Cap Index, likely forcing index-tracking funds to adjust their portfolios and sell their holdings.
The exclusion could extend beyond MSCI, as other index providers may adopt similar criteria, potentially amplifying the impact on Strategy's stock. The company, founded by Michael Saylor, operates a bitcoin-treasury model, raising capital through share and debt sales to purchase the cryptocurrency. According to an SEC filing, Strategy holds more than 850,000 bitcoin, acquired at an aggregate purchase price exceeding $64 billion.
Strategy had anticipated the exclusion, flagging it in its third-quarter SEC filing in October. The company has also challenged MSCI's proposal, describing the rules in an August letter as "discriminatory, arbitrary and misguided" and accusing the index provider of targeting digital asset treasury companies. Strategy argues the exclusion will have minimal impact, noting that MSCI-tracking funds hold only 3.1% of its shares, and has encouraged shareholders to oppose the decision.
MSCI's review has also affected other companies with significant cryptocurrency or holding-company exposure, including Tokyo-listed Metaplanet and the UK's Yellow Cake. Nearly two dozen crypto- and holding-focused companies have been placed on an exclusion watchlist, signaling broader implications for the sector.
The index decision comes as Strategy faces pressure from a prolonged decline in bitcoin prices. The company has accumulated over $60 billion worth of bitcoin since mid-2020, financed largely by issuing common and preferred stock at a premium to net asset value. However, if index-tracking funds reduce their exposure, the model could face additional challenges.
Bitcoin has 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%. Over the past year, the stock is down 45%, compared with a 28% drop in bitcoin.
The exclusion and ongoing bitcoin slump create a challenging environment for Strategy, as passive fund outflows could exacerbate selling pressure. Investors will be watching whether other index providers follow MSCI's lead and how the company's bitcoin-heavy strategy adapts to these headwinds.
This article is for informational purposes only and does not constitute financial advice.
