MicroStrategy Once Again Denied Entry to S&P 500, Bitcoin Holdings and Resulting Profit Volatility Become Main Obstacle

On November 28, 2025, SanDisk Corp. will officially join the S&P 500 Index, replacing Interpublic Group. Following the announcement, SanDisk’s stock price soared over 9% in after-hours trading. In stark contrast, MicroStrategy (formerly MicroStrategy), which holds 640,808 Bitcoins (worth $72.3 billion), was once again excluded, mainly due to excessive earnings volatility and a “B-” credit rating from S&P. This discrepancy highlights the cautious attitude of traditional financial institutions toward digital asset companies and reflects the S&P 500’s strict requirements for the financial stability of its constituents.

Why Did SanDisk Succeed in Joining the S&P 500?

SanDisk’s leap from the S&P SmallCap 600 Index to the S&P 500 marks a significant milestone for this computer storage manufacturer. The promotion occurred during the trading session before the U.S. Thanksgiving holiday and outside the regular quarterly adjustment window, demonstrating S&P Dow Jones Indices’ responsiveness to market changes. On the day of the announcement, SanDisk’s stock closed up 13.33% and climbed another 9% in after-hours trading, indicating an extremely positive market reaction. Such unscheduled index adjustments typically reflect the urgency and importance of constituent changes.

The core driver behind SanDisk’s successful advancement is the explosive growth in demand for artificial intelligence infrastructure. As enterprises increasingly deploy advanced machine learning models, high-performance storage solutions have become critical, directly boosting SanDisk’s market valuation. The company’s current market cap is around $33 billion, far exceeding the threshold for small-cap indices, making its transition to the S&P 500 a natural choice. From an industry perspective, the AI revolution is reshaping the technology sector, and storage companies, as foundational providers of data infrastructure, are being strategically revalued by the market.

Joining the S&P 500 means substantial capital inflows and improved liquidity for SanDisk. Under index fund rules, all passive funds tracking the S&P 500 must allocate shares in SanDisk according to its index weight, which is expected to bring in billions of dollars in capital. This institutional investment not only increases stock liquidity but also raises the company’s profile among large institutional investors. Historical data show that newly added S&P 500 constituents typically receive sustained capital attention after inclusion, an effect especially pronounced in the tech sector.

In-Depth Analysis of MicroStrategy’s S&P 500 Exclusion

Although MicroStrategy met several technical requirements for the S&P 500, including market cap and liquidity standards, its unique business model was the primary obstacle to inclusion. Led by Michael Saylor, the company currently holds 640,808 Bitcoins, valued at about $72.3 billion, making it the largest corporate holder of Bitcoin worldwide. However, this extreme asset concentration is viewed as a major risk by the index committee, especially given Bitcoin’s high price volatility. S&P Dow Jones Indices explicitly gave MicroStrategy a “B-” credit rating, specifically citing its excessive Bitcoin exposure, insufficient dollar liquidity, and single-line business model.

Earnings volatility is the most direct reason for MicroStrategy’s exclusion. The company’s financial performance is highly correlated with Bitcoin prices, resulting in extremely unstable quarterly results. For example, in Q2 2024, MicroStrategy achieved $10 billion in revenue and $14 billion in unrealized gains, while Q1 saw a loss of $4.2 billion. This roller-coaster profit model runs counter to the S&P 500’s preference for stability. The inclusion criteria require companies to be profitable for four consecutive quarters, a basic threshold MicroStrategy fails to meet due to Bitcoin’s price swings.

Traditional finance’s acceptance of digital asset companies remains limited, although some crypto-related firms like Robinhood have successfully joined the S&P 500. MicroStrategy’s case is more unique, as its business has almost entirely shifted to Bitcoin holdings and value storage—a fundamental departure from traditional listed company models. In its evaluation, the S&P index committee considers not only quantitative metrics but also places high importance on business model diversity, financial stability, and industry representativeness. While some argue that index methodologies should adapt to innovative companies, conservatives maintain that S&P 500 constituents must have predictable earnings and mature business models.

MicroStrategy Key Data & Exclusion Factors

Bitcoin holdings: 640,808 BTC

Holding value: Approximately $72.3 billion

Credit rating: B- (S&P)

2024 Q2 revenue: $10 billion

2024 Q1 loss: $4.2 billion

Stock pullback from high: 35% (since July high of $434)

Market cap ranking: Does not meet S&P 500 stability requirements

The Value Perception Gap Between Traditional Finance and Digital Asset Firms

The contrasting fortunes of SanDisk and MicroStrategy reveal a deeper market reality: a significant value perception gap between traditional finance and digital asset companies. While Bitcoin and blockchain technology have achieved a degree of institutional acceptance, public companies with digital assets as their core business model still face challenges from traditional evaluation frameworks. MicroStrategy’s case is particularly representative; its stock price has fallen 35% from its July 2024 high of $434, reflecting market disappointment over its S&P 500 exclusion and concerns about its downgraded credit rating.

This perception gap is not limited to the S&P 500 selection process but is also evident in broader index compilation. Recent MSCI consultations indicate MicroStrategy may be removed from key stock indices, further unsettling investors. As a component of the MSCI USA and MSCI World indices, MicroStrategy has long enjoyed support from billions in passive capital. If removed, it could trigger massive capital outflows. Index providers’ concerns over business models concentrated in a single asset class are rising, even if that asset is an emerging store of value like Bitcoin.

Market analyst Li Ming observes: “Traditional finance’s acceptance of digital asset companies is a gradual process, requiring breakthroughs in regulatory certainty, financial transparency, and business model sustainability.” From an industry evolution standpoint, companies like Robinhood that are lightly involved in crypto have gained traditional finance’s recognition, but firms like MicroStrategy—whose balance sheets are deeply tied to Bitcoin—remain in a gray area. Exchanges like Nasdaq are tightening scrutiny on digital asset treasury companies, increasing the difficulty for such firms to join major indices in the future, even if they outperform Bitcoin or the S&P 500 in certain periods.

Market Impact and Future Outlook

MicroStrategy’s repeated exclusion from the S&P 500 has had multiple market impacts. Most directly, the company’s stock price remains under pressure, currently down more than a third from its yearly high, with significant market cap evaporation. This contrasts with Bitcoin’s recent price trends, indicating investors are reassessing MicroStrategy’s “Bitcoin proxy” valuation logic. Traditionally, MicroStrategy’s stock was expected to amplify Bitcoin’s price movements, but the index exclusion introduces a new risk premium, altering previous pricing models.

For the broader crypto market, this event reveals the boundaries of traditional finance’s acceptance of digital assets. Institutional investors may prefer to gain Bitcoin exposure through regulated vehicles like spot Bitcoin ETFs, but remain cautious about public companies whose business models heavily depend on cryptocurrency price swings. This distinction is significant for the future development path of crypto enterprises. Pure digital asset companies may need to consider business diversification or seek to establish themselves in crypto-specific indices rather than traditional stock indices to attract targeted investor bases.

Looking ahead, there is still a theoretical possibility for MicroStrategy to join the S&P 500, but only if it addresses its earnings volatility. Possible solutions include introducing hedging strategies to smooth the impact of Bitcoin price swings or developing non-Bitcoin revenue streams to demonstrate business model sustainability. At the same time, the S&P index committee may adjust its evaluation framework as the market evolves to be more inclusive of innovative business models. However, for the foreseeable future, the value perception gap between traditional finance and digital asset companies will persist. Investors will need to find a balance during this transitional period, capturing digital asset growth potential while managing the risk of limited acceptance from traditional finance.

Conclusion

SanDisk’s successful promotion and MicroStrategy’s repeated exclusion are not just the fate of two individual companies but a microcosm of the value assessment clash between traditional finance and the digital asset sector. As the world’s most influential market benchmark, the S&P 500’s selection criteria reflect mainstream finance’s emphasis on stability, predictability, and business diversification. Though MicroStrategy has set a corporate record for Bitcoin holdings, its earnings volatility fails to meet traditional finance’s stability requirements. This case offers an important lesson for many crypto-native firms: in pursuing innovation, attention must also be paid to traditional financial evaluation dimensions to go further on the path to mainstream acceptance.

FAQ

1. Why did MicroStrategy fail to be included in the S&P 500?

MicroStrategy was excluded mainly due to excessive earnings volatility and its financial performance being highly tied to Bitcoin prices, making it unable to meet the S&P 500’s requirement of four consecutive quarters of stable profitability. The “B-” credit rating from S&P also cited its excessive Bitcoin exposure and single-line business model, leading the index committee to deem it unqualified.

2. Why was SanDisk included in the S&P 500?

SanDisk’s inclusion was driven by explosive demand for AI infrastructure, pushing its market cap to about $33 billion, exceeding the small-cap threshold. Its business model aligns with traditional finance’s recognition of the tech sector, and its stable financial performance and industry outlook made it a natural fit for the S&P 500, with its stock price surging after the announcement.

3. How much Bitcoin does MicroStrategy hold?

MicroStrategy currently holds 640,808 Bitcoins, valued at approximately $72.3 billion, making it the world’s largest corporate Bitcoin holder. However, this asset concentration is seen as a risk by S&P, making it hard to meet the index’s financial stability requirements.

4. What are the S&P 500’s profitability requirements for constituents?

The S&P 500 requires candidate companies to be profitable for four consecutive quarters, with relatively stable and predictable earnings. MicroStrategy’s quarterly performance fluctuates dramatically with Bitcoin prices (e.g., $10 billion profit in Q2 2024 vs. $4.2 billion loss in Q1), failing to meet this basic threshold.

5. Does MicroStrategy have a chance to join the S&P 500 in the future?

There is a chance, but the earnings volatility must be addressed. Possible paths include introducing hedging strategies to smooth Bitcoin price impacts or developing non-Bitcoin-related businesses to prove business model sustainability. The S&P index committee may also adjust its evaluation framework as the market evolves, but in the short term, traditional finance’s acceptance of digital asset firms remains limited.