With the close of the third quarter, analysts are beginning to forecast MicroStrategy’s earnings for the period. Although the company has yet to release its official earnings report, preliminary estimates indicate that MicroStrategy is expected to achieve approximately $2.9 billion in net income, significantly influenced by its Bitcoin investments.
Jeff Walton, Chief Risk Officer at Strive, has shared a pro forma analysis estimating earnings per share (EPS) to be around $10 for the quarter. Should these predictions hold true, this would result in a trailing 12-month total EPS of $22.80. Notably, if confirmed, this would represent MicroStrategy’s second consecutive quarter of profitability, which is a crucial criterion for potential inclusion in the S&P 500 index.
Bitcoin’s performance has also influenced MicroStrategy’s earnings momentum, closing Q3 at $114,390, a rise from $107,778 at the end of Q2. The company bolstered its Bitcoin portfolio by acquiring 42,906 BTC during the quarter at an average purchase price of $112,100, reinforcing its status as the largest corporate holder of Bitcoin.
ETF analyst Jeffrey Seyffart remarked that if these earnings estimates are accurate, MicroStrategy could meet the necessary conditions for joining the S&P 500 by December, pending the approval from the S&P Dow Jones Indices committee, which assesses index changes quarterly, with the next review set for the second Friday of December.
Interestingly, MicroStrategy already fulfills the essential requirements to enter the index, including being U.S.-listed, maintaining a market capitalization above the necessary threshold, having an adequate public float, and demonstrating consecutive profitable earnings reports. However, despite meeting these technical criteria last month, the company was overlooked, leading to speculation about the reasons behind this decision. Many analysts suggest that the S&P 500 may still have reservations regarding the volatility associated with MicroStrategy’s substantial Bitcoin holdings.
The S&P 500 has gradually started to welcome crypto-related companies over the past year; notable examples include Coinbase and Block Inc., which successfully entered the index, showcasing a shift in traditional finance’s approach to digital asset involvement.
Investors will be eagerly awaiting the official earnings report from MicroStrategy, scheduled for November 4, as discussions surrounding the company’s potential inclusion in the S&P 500 continue to intensify. This prospect generates a sense of optimism about MicroStrategy’s future, particularly given the evolving acceptance of cryptocurrency within mainstream finance.