- According to analysts at Benchmark, one of the largest holders of Bitcoin, represented by MicroStrategy, has the potential to join the S&P 500.
- In order to achieve this, MicroStrategy needs to adopt new accounting standards that were approved by the Financial Accounting Standards Board (FASB) in December 2023.
- MicroStrategy will be presenting its financial report for the first quarter of 2024 in the upcoming days.
According to CoinDesk, the investment company Benchmark has concluded that MicroStrategy, as one of the major holders of Bitcoin, has a good chance of being included in the S&P 500 list. This would require the corporation to adopt new accounting standards that were approved by the FASB in December 2023.
The new guidance allows companies to value digital assets on their balance sheets at their current value and record price changes in their net income each reporting period. To implement these standards, MicroStrategy needs to present their financial report for the first quarter of 2024.
An image of MicroStrategy’s logo.
While the new accounting standards officially take effect on January 1, 2025, the FASB allows for early adoption. Analyst Mark Palmer wrote that the impact of these rules on MicroStrategy’s earnings per share will be significant, estimating that adopting the standards early would increase retained earnings by $3.1 billion at the beginning of 2024.
Benchmark’s analysis suggests that MicroStrategy meets almost all the requirements for inclusion in the S&P 500 Index, including highly liquid shares and a market value exceeding $18 billion. If the new standards are approved, the company’s earnings per share could exceed $300, which would be a crucial step toward joining the index. However, MicroStrategy needs to show positive profits in the first quarter of 2024 for their application to be considered by a special committee.
In the past, MicroStrategy has reported losses in 10 out of the last 14 reporting periods. It is worth mentioning that Michael Saylor, the CEO of MicroStrategy, recently earned $370 million from the sale of company shares.