Strategy Made $19.5 Billion in Profit. So Why Is MSCI Removing It From Stock Indexes?

MSCI plans to remove Strategy’s MSTR shares from the MSCI USA Index after trading closes on 30 November, which will also affect broader indexes including MSCI World and MSCI All Country World. Funds that track those indexes generally sell shares removed from them, potentially reducing demand for MSTR and making it harder for Strategy to raise money for Bitcoin purchases.

MSCI’s new rules are intended to exclude companies it considers primarily holders of financial assets rather than operating businesses; the specific tests Strategy failed have not been disclosed. Strategy says its fundraising and Bitcoin treasury management are genuine business activities. Although it reported $19.53 billion in quarterly net income, nearly all its $20.91 billion in operating income came from Bitcoin’s accounting-value increase, while its software division generated $125.4 million in revenue, down 3% year on year. Strategy estimates index-linked funds hold about 13 million shares, or 3.1% of its common stock; the removal does not require it to sell Bitcoin.