Michael Saylor: The accounting rules that will take effect next year may enable MicroStrategy to meet the profit requirements of the S&P 500

According to Barrons, MicroStrategy Chairman Michael Saylor did not explicitly state in a recent interview whether the company might be included in the SP 500. However, he said that given his optimistic view of Bitcoin, MicroStrategy could report billions of dollars in quarterly net income next year due to the growth in value of its Bitcoin holdings. The accounting rule changes set to take effect in 2025 may enable MicroStrategy to meet the profit requirements for inclusion in the SP 500. It is reported that MicroStrategy's traditional software business (its main business before it started buying large amounts of Bitcoin in 2020) is relatively small and may only be valued at about $1 billion. In addition, this business is losing money according to GAAP (Generally Accepted Accounting Principles), making it difficult to meet the requirements for inclusion in the SP 500 index based on this alone. The upcoming accounting rules will adjust the company's valuation of its Bitcoin holdings from their current undervalued status to fair market value and could lead to significant net income growth when Bitcoin prices rise. However, membership into the SP 500 index is decided by invitation by Standard Poor’s Global Index Committee which reviews profitability, market capitalization and other factors.