Why MicroStrategy's Exclusion from the S&P 500 Signals a Mispricing Opportunity for Bitcoin-Centric Stocks

The recent exclusion of MicroStrategy (MSTR) from the S&P 500 rebalancing in September 2025 has sparked intense debate about the evolving dynamics of crypto-adjacent equities. While the S&P 500 committee cited financial instability and inconsistent earnings as the primary reasons for the decision, this exclusion may signal a broader market mispricing of Bitcoin-centric stocks. By dissecting the strategic and valuation implications of the S&P’s risk-averse criteria, investors can identify compelling long-term opportunities in companies like MicroStrategy, which are redefining institutional exposure to digital assets.

The S&P 500’s Risk-Averse Lens and MicroStrategy’s Exclusion

The S&P 500 committee’s discretionary process prioritizes financial stability, liquidity, and consistent earnings over innovative business models. MicroStrategy, despite a $40 billion market capitalization and robust liquidity, was excluded due to its earnings volatility tied to Bitcoin’s price swings. For instance, the company swung from a $10 billion net profit in Q2 2025 to a $4.2 billion loss in the prior quarter, a volatility the index committee deemed incompatible with its criteria [2]. In contrast, Robinhood’s inclusion—despite its own crypto-related risks—highlights a preference for diversified revenue streams and perceived stability [1].

This exclusion underscores a critical disconnect: the S&P 500’s traditional metrics fail to account for the unique value proposition of Bitcoin-centric equities. As Bloomberg’s Eric Balchunas noted, the committee’s secretive, discretionary approach often overlooks companies with disruptive strategies, even if they meet quantitative thresholds [2]. For MicroStrategy, this means its aggressive Bitcoin treasury strategy—a $1.6 billion investment in 636,505 BTC—remains undervalued by conventional benchmarks [5].

Valuation Metrics and Strategic Resilience

MicroStrategy’s valuation metrics paint a picture of both optimism and caution. The stock trades at a P/E ratio of 23.15 and an EV/EBITDA of 20.30, reflecting investor enthusiasm for its Bitcoin exposure [1]. However, its P/S ratio of 178.37—far exceeding industry averages—signals potential overvaluation [3]. Critics argue that intrinsic value analyses suggest the stock is overpriced by 90% relative to fundamentals [3]. Yet, these metrics ignore the company’s strategic pivot toward AI and digital transformation, which aligns with broader tech trends driving market valuations [4].

Michael Saylor’s response to the exclusion has been emblematic of this duality. Rather than retreating, he has doubled down on Bitcoin investments and rebranded MicroStrategy as a “technology company with a Bitcoin treasury,” leveraging its position as the largest corporate holder of BTC [5]. This strategy has allowed the stock to outperform both the S&P 500 and Bitcoin itself in recent months, despite the 3% post-exclusion drop [3].

Market Disconnect and Long-Term Opportunities

The S&P 500’s exclusion of MicroStrategy reveals a systemic bias against volatility-driven business models. While the index added Robinhood and AppLovin for their diversified revenues, it overlooked the potential of Bitcoin-centric equities to redefine institutional adoption of digital assets. This bias creates a mispricing opportunity: investors who recognize MicroStrategy’s role as a “clean” Bitcoin proxy—avoiding the execution risks of mining—can capitalize on its undervaluation relative to its strategic potential [1].

Moreover, the exclusion highlights the S&P 500’s lag in adapting to crypto’s financial dynamics. As Bitcoin’s institutional adoption accelerates, companies like MicroStrategy may become benchmarks in their own right, bypassing traditional indices. Saylor’s aggressive buybacks and AI-driven revenue streams further insulate the company from short-term volatility, positioning it for long-term growth [4].

Conclusion

MicroStrategy’s exclusion from the S&P 500 is not a verdict on its long-term viability but a reflection of the index’s outdated criteria. By prioritizing stability over innovation, the S&P 500 has undervalued a company that is pioneering institutional Bitcoin adoption. For investors, this mispricing represents a strategic entry point into a sector poised for exponential growth. As the crypto-adjacent equity landscape evolves, the disconnect between traditional metrics and disruptive models will only widen, favoring those who dare to challenge the status quo.

Source:
[1] MicroStrategy Excluded from S&P 500 Rebalancing [https://coincentral.com/microstrategy-left-out-of-latest-sp-500-rebalancing-as-new-stocks-join/]
[2] Why MicroStrategy and Robinhood Were Excluded from [https://www.okx.com/learn/microstrategy-robinhood-s-p-500-exclusion]
[3] MicroStrategy's Bitcoin Play Misses Out On S&P 500 [https://www.bitget.com/news/detail/12560604953859]
[4] Strategy (MSTR) AI Stock Analysis [https://www.tipranks.com/stocks/mstr/stock-analysis]
[5] MicroStrategy's Bitcoin Play Misses Out On S&P 500 [https://beincrypto.com/microstrategy-misses-out-sp-500-index/]