Michael Saylor’s Strategy and Its Potential $16 Billion S&P 500 Inclusion Windfall

The potential inclusion of Strategy (formerly MicroStrategy) in the S&P 500 index has ignited a firestorm of debate among investors, analysts, and institutional players. With a projected $16 billion windfall from passive fund flows if added to the index, the company’s Bitcoin-centric treasury model and high-volatility profile present a unique case study for evaluating the risks and rewards of crypto-exposed growth stocks. This analysis unpacks the mechanics of Strategy’s business model, the implications of S&P 500 inclusion, and whether the risks justify the long-term upside for investors.

The Bitcoin Treasury Model: A Flywheel of Accumulation

Strategy’s transformation from a business intelligence software company to a Digital Asset Treasury Company (DATCO) has been nothing short of revolutionary. By 2025, the firm held 628,791 Bitcoin—approximately 3% of the total supply—acquired for $46.07 billion and now valued at over $112 billion [1]. This aggressive accumulation strategy, funded through convertible bonds, equity offerings, and ATM programs, has created a compounding effect: Bitcoin per share (BPS) growth drives equity appreciation, which in turn funds further Bitcoin purchases [4].

The model’s success hinges on three pillars:
1. Low-Cost Capital: Convertible bonds with coupons as low as 0–1% allow Strategy to finance Bitcoin purchases at minimal cost [5].
2. Fair Value Accounting: Bitcoin’s market value is reflected on the balance sheet, creating a direct link between crypto price action and earnings [1].
3. Institutional Validation: By positioning Bitcoin as a corporate store of value, Strategy has attracted pension funds and institutional investors seeking indirect crypto exposure [3].

However, this model is not without risks. The company’s debt structure includes $9.25 billion in convertible notes, which could become problematic if Bitcoin’s price stumbles during the 2028 halving cycle [5]. Additionally, the reliance on equity financing has led to significant dilution, with some investors questioning whether the stock can outperform Bitcoin itself [4].

S&P 500 Inclusion: A Double-Edged Sword

The S&P 500’s September 2025 rebalance presents a pivotal moment for Strategy. If included, passive funds tracking the index would be forced to purchase ~50 million shares, valued at ~$16 billion [1]. This influx of capital could amplify liquidity, reduce volatility, and legitimize Bitcoin as a mainstream asset. Historical precedents, such as Coinbase’s May 2025 inclusion, suggest that index additions can trigger immediate price surges—Coinbase’s stock jumped 8% in after-hours trading post-announcement [2].

Yet, the S&P 500 committee’s discretion remains a wildcard. While Strategy meets the technical criteria (market cap > $90 billion, positive earnings), its volatility and crypto concentration could deter inclusion. The committee’s emphasis on sector balance and financial stability may favor more “traditional” tech firms over crypto-exposed outliers [2].

Risk/Return Dynamics: Justifying the Volatility

For long-term investors, the key question is whether Strategy’s risks are justified. The company’s 30-day stock volatility of 96% [2] dwarfs the S&P 500’s 15% average, making it a high-stakes bet. However, this volatility is partially offset by Bitcoin’s role as a hedge against fiat devaluation. As of Q2 2025, Strategy’s Bitcoin yield (25% year-to-date) and unrealized gains ($13.2 billion) provide a buffer against equity market downturns [1].

Historical case studies of crypto-exposed stocks post-S&P 500 inclusion offer mixed signals. Datadog, for instance, saw its stock price surge post-inclusion but also experienced a 68% drop during the 2022 inflation shock [5]. Similarly, Block’s stock has shown resilience despite a 30% three-month gain, driven by its dual ecosystem of Square and Cash App [4]. These examples underscore the dual nature of index inclusion: it amplifies both upside potential and downside risk.

The Thematic Case for Inclusion

Beyond the numbers, Strategy’s inclusion in the S&P 500 would signal a paradigm shift in how institutions view Bitcoin. By acting as a proxy for crypto exposure, the company could bridge the gap between traditional finance and digital assets. This is particularly relevant as regulatory clarity improves and Bitcoin ETFs gain traction.

However, investors must also consider macroeconomic headwinds. A potential Fed rate hike or regulatory crackdown could erode Bitcoin’s value, dragging down Strategy’s stock. The company’s mNAV (multiple to net asset value) of 1.61 [5] suggests the market is already pricing in some level of Bitcoin optimism, but a correction could test this assumption.

Conclusion: A High-Volatility Bet with Thematic Payoff

Strategy’s Bitcoin treasury model and potential S&P 500 inclusion present a compelling but high-risk proposition. For long-term investors with a thematic allocation to crypto, the company offers a unique way to gain exposure to Bitcoin’s growth while leveraging institutional-grade capital structures. However, the risks—volatility, regulatory uncertainty, and debt exposure—demand careful consideration. If the S&P 500 committee greenlights inclusion, the $16 billion windfall could catalyze a new era for crypto integration. But if not, investors may find themselves holding a stock that’s more correlated to Bitcoin’s whims than traditional equity fundamentals.

In the end, the decision to invest in Strategy hinges on one question: Is Bitcoin’s long-term value proposition worth the short-term volatility? For those who answer yes, the rewards could be transformative. For others, the risks may outweigh the potential.

Source:
[1] Strategy Announces Second Quarter 2025 Financial Results [https://www.strategy.com/press/strategy-announces-second-quarter-2025-financial-results_07-31-2025]
[2] S&P 500 Potential: Strategy Could See $16 Billion Inflows [https://www.mitrade.com/au/insights/news/live-news/article-3-1098666-20250905]
[3] How Pension Funds Are Using MicroStrategy to Gain ... [https://www.bitget.com/news/detail/12560604942282]
[4] Strategy Inc (MSTR) Q2 FY2025 earnings call transcript [https://finance.yahoo.com/quote/MSTR/earnings/MSTR-Q2-2025-earnings_call-341134.html/]
[5] Bitcoin and Strategy Lead Risk-Adjusted Returns as ... [https://www.coinglass.com/ru/news/534645]