The revelation of the Nasdaq 100 adjustment tonight: Strategy (MSTR.US) faces the pressure of being removed.

Note that some analysts pointed out this week that in the annual component stock adjustment held on Friday, Bitcoin hoarding giant Strategy (MSTR.US) may face the risk of being removed from the Nasdaq 100 index. This is due to doubts about its business model, which has put pressure on its stock price. Strategy was originally a software company, but shifted to Bitcoin investment in 2020. Earlier this year, its market value reached a peak of $128 billion in a hot rally and was included in the Nasdaq 100 index's technology subcategory in December last year. This decision has been questioned by some market observers, who believe that this pioneering business model, which has spawned dozens of imitators, is more like an investment fund. According to reports, Strategy reported a net profit of $2.78 billion for the three months ending September 30, compared to a loss of $340.2 million in the same period last year. This was mainly due to an accounting change that allowed it to recognize the appreciation of its bitcoin holdings as revenue. Meanwhile, the company's traditional software business revenue was only $128.7 million. Steve Sosnick, Chief Market Analyst at Interactive Brokers Group, Inc. Class A, stated: "If Strategy is seen as a holding company or a cryptocurrency company rather than a software company with its traditional business model, then it is more likely to be removed." The Nasdaq 100 index tracks the largest non-financial companies by market value, and its operator Nasdaq Stock Exchange declined to comment before the announcement on Friday. The media reported in September that Nasdaq has been tightening requirements for digital asset reserve companies listed on its exchange. The exchange typically does not comment on the practice of including these companies in its index. Strategy did not respond to requests for comments. A line graph shows the performance of Strategy and Bitcoin over the past two years. The index component adjustments are closely watched because they determine which companies can benefit from billions of dollars in passive investor funds. However, Michael Saylor, founder of Strategy, overall downplayed concerns about possible index removal, and some other analysts also expressed that they do not expect Nasdaq to remove Strategy on Friday. Doubts about the digital asset reserve model The market's concerns about the sustainability of cryptocurrency reserve companies have intensified, and their stock prices have been proven to be extremely sensitive to Bitcoin fluctuations. MicroStrategy's stock has dropped 65% from its peak in 2024, down 36% year-to-date, while Bitcoin has dropped 3.6% this year. As of Thursday, Strategy's market value has dropped to $52.7 billion, while the value of its Bitcoin holdings exceeds $61 billion. Mike O'Rourke, Chief Market Strategist at Jones Trading, pointed out in a report this week that although this is not enough reason to remove Strategy solely based on market value, Strategy was initially included for technical reasons, and Friday is a "great opportunity for Nasdaq to correct last year's mistake." Kesha Sany, Head of Index Strategy at Jefferies Financial Group Inc., estimates that if Nasdaq removes Strategy, the company may experience passive outflows of around $1.6 billion. Global index provider MSCI has expressed concerns about incorporating digital asset reserve companies into its benchmark indices. MSCI is set to decide in January whether to remove Strategy and similar companies. Saylor told the media this month that Strategy is in communication with MSCI, but it is not important if it is removed. Some analysts believe Strategy is safe because its market value is still relatively high. H.C. Wainwright analyst Mike Colonos doubts that Strategy will be removed because it is "larger than about 30 other companies in the Nasdaq 100 index." In addition to MicroStrategy, Jefferies Financial Group Inc. estimates that pharmaceutical company Biogen, IT solutions provider CDW, and four other stocks may also be removed from the Nasdaq 100 index. According to data compiled by the London Stock Exchange Group, these six companies currently have the lowest market capitalization among the 100 component stocks. Jefferies Financial Group Inc. expects that the retail giant Walmart Inc., with a market value of $932.7 billion, will not meet the inclusion criteria this time, as its effective first trading day on Nasdaq (December 8) is later than the reference date of November 28 set by the exchange for this adjustment. Nasdaq's announcement is expected to be released after the market closes on Friday, and the adjustment will take effect on December 22.