By Nate Wolf

Shares of Strategy were falling Monday after the Bitcoin-treasury pioneer missed out on inclusion in the S&P 500, dashing hopes that would trigger a flow of investments from funds seeking to match the index's performance.

The S&P Dow Jones Indices committee announced its quarterly rebalance after markets closed Friday. It added AppLovin, Robinhood Markets, and Emcor Group to the large-cap index.

While Strategy, formerly known as MicroStrategy, posted a profit last quarter, clearing the final hurdle required for potential inclusion, it didn't make the cut. The stock was down 2.1% to $329 in premarket trading Monday. It had risen 169% over the 12 months through Friday's close.

The decision won't have come as a shock to seasoned investors, and it shouldn't discourage those who have bet on the buzzy cryptocurrency company, argued Benchmark's Mark Palmer, a longtime fan of the stock. Benchmark reiterated a Buy rating and a $705 price target for the stock in a research note Monday.

"In the long run, the omission says less about MSTR's business or its balance sheet than it does about the index committee's discretion and their evolving comfort level with bitcoin-centric corporate models," Palmer wrote.

With a market capitalization of more than $90 billion, Strategy is one of the largest companies not in the S&P 500, Benchmark noted. Its business model, however, would be a first for the index.

Over the last four years, Executive Chairman Michael Saylor has transformed Strategy from a struggling enterprise software company into the world's largest corporate holder of Bitcoin. The software operating business is a footnote at this point, and the stock essentially acts as a levered play on Bitcoin.

Strategy's model is highly sensitive to changes in the price of the cryptocurrency, which can mean big swings in the company's earnings, Benchmark said. The inclusion committee may want to see more profitable quarters before bringing Strategy into the index.

Benchmark pointed to Alphabet as a case study for Strategy shareholders. The software behemoth took almost two years after its initial public offering before breaking into the S&P 500 in 2006. Unexpected omissions, Benchmark saod, typically end in eventual inclusions.

"The S&P 500 process often requires companies to not only check the boxes on eligibility but also to prove their staying power," Palmer wrote.

S&P Dow Jones Indices didn't immediately respond to Barron's request for comment. The firm typically doesn't comment on specific rebalancing decisions.

Saylor, for his part, appeared to react to the decision by pointing out Strategy's recent outperformance compared to the S&P 500.

Speaking on CNBC's "Squawk Box" Monday morning, Saylor said he didn't see a bias regarding companies with significant Bitcoin holdings. Strategy didn't expect to be selected for the index so soon, he added.

"This is a brand-new novel concept. Every quarter, we make new believers, " Saylor said. "I think that will continue for the foreseeable future."

Write to Nate Wolf at nate.wolf@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 08, 2025 09:20 ET (13:20 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.