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Highlights
- Bloomberg analyst Eric Balchunas cited a 'secret committee' behind the decision to exclude MSTR stock from S&P 500.
- The stock dropped nearly 3% in after-hours trading, slipping below $330, raising concerns it could revisit the $300 level.
- While MSTR was excluded, Robinhood, AppLovin, and Emcor Group were added to the index.
Michael Saylor’s Strategy (NASDAQ: MSTR) missed the inclusion in the S&P 500 index on Friday, despite strong market expectations. Bloomberg analyst Eric Balchunas stated that there’s a ‘secret committee’ rejecting the MSTR stock inclusion, despite meeting all criteria. The stock price tanked 2.90% in the after-hours and is once again trading under $330 level.
Rejecting MSTR Stock Inclusion to S&P 500: A Conspiracy?
Michael Saylor’s Strategy, the largest corporate Bitcoin holder, failed to make it to the S&P 500 in a major setback for investors. This is despite the fact that the company could meet multiple criteria such as liquidity, market cap, public float etc. Following the news, the MSTR share price cracked nearly 3% in the after-hours trading on Friday.
Bloomberg ETF strategist Eric Balchunas questioned why MSTR stock was excluded from the S&P 500 Index despite meeting eligibility requirements. Balchunas noted that the decision ultimately came down to the discretion of the S&P’s Index Committee, which he described as operating more like an “active fund run by a secret committee” rather than a strictly rules-based system.
Blachunas added that Bloomberg had previously interviewed a former head of the committee on its Trillions podcast, shedding light on how such decisions are made. In the podcast, Balchunas and his colleagues discuss a shadow committee in the S&P 500 that takes the call on which companies can join the index. In the past, the committee has rejected top firms like Elon Musk’s Tesla.
“Would be interesting to see a list of all the stocks that were delayed entrance to SPX by The Committee, I know it would include some real studs, eg Microsoft, Tesla,” wrote Balchunas.
Additions to the S&P 500 often trigger buying activity from index funds and ETFs that track the benchmark. This typically provides support for the newly included stock’s price.
Can Fed Rate Cut Prevent the Stock from Sliding Further?
From the highs of $450 in mid-July, the MSTR stock price has been moving sideways, with some experts predicting that it could touch $300 again before a trend reversal to the upside. All hopes are on the upcoming Fed rate cuts at the FOMC meeting on September 17, which can provide some liquidity boost for the shares.
Crypto-friendly brokerage platform Robinhood has secured a spot in the index, alongside mobile technology firm AppLovin and construction services provider Emcor Group.
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