Strategy Shares Dip as MSCI Adopts Rules That Could Oust It From Its Indexes

3-line summary

• Strategy (formerly MicroStrategy) shares fell about 3% in Friday premarket trading after MSCI adopted new rules that could remove it from MSCI indexes; MSCI had previously flagged Strategy for potential removal under a 'non-operating companies' methodology, alongside Sharplink, Ton Strategy Company, Solana Company, and DeFi Development Corp, which were also placed on a removal watchlist. The prior interim restriction targeted companies holding digital assets equal to 50% or more of total assets.
• Under the new rules, MSCI drops the interim restriction and instead evaluates companies using an operating-assets screen and five financial ratios, with a buffer to reduce volatility: companies seeking inclusion are restricted if they fail the eligibility screen in either of the last two annual reporting periods, while current constituents are removed only if they fail the screen in both of the last two annual periods; MSCI said it may also consider the latest interim report where available. The new methodology takes effect from the November index review, with MSCI set to publish a final list of potentially affected companies on November 11.
• Strategy had previously objected to the proposal: Chairman Michael Saylor and CEO Phong Le called it 'discriminatory' toward digital-asset-holding companies, and the company argued MSCI-index-tracking funds hold only 3.1% of shares outstanding (about 13 million shares), less than a single day's trading volume.

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