Strategy Stock Drops 7% Amid MSCI Index Eligibility Review

Strategy (formerly MicroStrategy), which has been under pressure in recent weeks, has seen its stock drop by 7.0% after MSCI reopened a consultation that could lead to it being classified as a non-operating entity and potentially excluded from key global indexes.

The company is currently selling Bitcoin and common stock to meet its roughly $1.2 billion annual preferred dividend obligations. This has raised concerns about the viability of the Bitcoin treasury company model, which involves holding large amounts of cryptocurrency on the balance sheet.

MSCI's review of Strategy's index eligibility highlights the risks associated with this approach, particularly in light of large unrealized losses and heavy reliance on capital markets.