MSCI removes Strategy from indices, pressuring stock
MSCI's decision to remove Strategy from its indices will force index funds to sell holdings, creating significant selling pressure. The move threatens the company's ability to maintain its share price above $100, a level required for issuing new shares.
MSCI has decided to remove Strategy from its indices, a move that will force index funds to sell their holdings and create significant selling pressure on the stock. Strategy has been spending approximately $200 million per week to buy back its own shares to keep the price above $100, a level required for issuing new shares at par. Despite these efforts, the stock has hovered between $99.8 and $100.9. The removal from MSCI is expected to lower the company's Market-to-Net-Equity ratio, which was recently at 1.15, potentially back towards 1.0. While this does not directly force Bitcoin sales, it raises questions about the company's ability to continue its share issuance strategy and its overall relevance to Bitcoin accumulation. The index exclusion highlights the structural risks associated with companies that rely on index inclusion and share issuance to support their balance sheets and asset accumulation strategies.