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MicroStrategy (MSTR) Stock Surges 5% on S&P 500 Hopes as Bitcoin Hits Record Close

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Logo of MicroStrategy Incorporated, featuring the word "strategy8" prominently displayed in a modern font.

Key Takeaways

  • MicroStrategy qualifies for S&P 500 inclusion after Bitcoin’s surge pushed its earnings past $11B over four quarters .
  • STRK preferred shares jumped 15% in a day, offering 6.6% yield as traders anticipate index inclusion .
  • Coinbase surged 43% in June, fueled by stablecoin revenue growth and the GENIUS Act’s regulatory clarity .
  • S&P inclusion isn’t guaranteed—the committee could reject MSTR over its Bitcoin-focused model .
  • Analysts see 27% upside for MSTR ($514 avg target), while COIN’s stablecoin income could overtake trading fees .

Why MicroStrategy Might Enter the S&P 500 (And Why It’s Not Simple)

Bitcoin’s rally to $107,750 in late June wasn’t just a win for crypto traders. For MicroStrategy, it meant clearing the final hurdle for S&P 500 eligibility: four straight quarters of net profits. See, accounting rules used to force companies like MSTR to report Bitcoin holdings at their lowest value ("impaired") even if prices recovered later. That created phantom losses on paper. But new FASB rules let firms mark crypto to market value—so when Bitcoin surged, MicroStrategy’s Q2 earnings exploded to $14B. That pushed their 12-month net income to $11B, smashing the S&P’s profitability requirement .

But qualifying isn’t the same as getting in. The S&P committee weighs other stuff too, like whether a company is an "operating business" and not just an investment fund. Some analysts argue MSTR’s whole model now revolves around hoarding Bitcoin (597,325 BTC worth $64B!), which looks a lot like a closed-end fund. Those are excluded from the index. The committee’s September decision will be messy—"controversial and heavily debated," as analyst Jeff Walton puts it . If they say yes? Index funds like Vanguard and BlackRock would have to buy MSTR shares, pumping demand. If no? That hype evaporates overnight.

MicroStrategy’s Perpetual Shares: The Secret Play

While everyone watches MSTR’s common stock, its perpetual preferred shares (STRK, STRF) are quietly going nuts. STRK spiked 15% on July 1st to $121, while STRF rose 7.5%. Why? Two reasons. First, they’re seen as a backdoor bet on S&P 500 inclusion—if MSTR gets added, these could benefit from the broader investor attention. Second, their yields are juicy: STRK pays 6.6%, STRF 8.8%, and STRD a wild 11.1%. That’s way above the Fed’s 4.25%-4.5% rate .

These aren’t your average dividend stocks though. Perpetual preferreds act like hybrid debt/equity—no maturity date, but fixed payouts. STRK’s 42% return since February crushes Bitcoin’s 11% and the S&P’s 2% over the same period. But the yields hint at risk. If Bitcoin crashes, MSTR’s ability to cover those payments weakens. And if the S&P committee rejects MSTR? These could tumble hard. Still, for now, traders are front-running the September decision, betting the committee blinks .

Coinbase’s Hidden Engine: Stablecoins Aren’t Just for Trading

Coinbase’s 43% June boom had little to do with trading fees. It was all about stablecoins. The Senate passing the GENIUS Act (a bipartisan stablecoin bill) lit a fire under COIN. Why? Coinbase pockets 100% of the interest from USDC reserves held on its platform, plus 50% of all other USDC-related revenue. With USDC’s market cap ballooning to $193B (up 48% YoY), that’s become a cash geyser. Q1 stablecoin revenue hit $410M—up 50% YoY—making it Coinbase’s second-biggest income stream after trading .

Legislation turns this from a side hustle into a core business. The GENIUS Act sets clear rules: issuers must back stablecoins 1:1 with cash/liquid assets and face monthly audits. For Coinbase, this means:

  • Merchant adoption: New tools let Shopify accept USDC payments, with customers getting 1% cash back.
  • Institutional trust: Banks and payment firms can finally use stablecoins without regulatory fear.
  • Revenue diversification: CEO Brian Armstrong wants USDC to overtake Tether. Less reliance on volatile crypto trading volumes .

How MicroStrategy and Coinbase Stack Up

Why Analysts Are Obsessed With MSTR Right Now

Wall Street’s screaming "Strong Buy" on MicroStrategy—11 of 13 analysts rate it that way, with a $514 average target. Benchmark’s $650 target implies 74% upside. Even after its rally, they see room because:

  • Bitcoin leverage: MSTR acts like a "spot Bitcoin ETF on steroids." When BTC rises 10%, MSTR often jumps 15-20% due to its treasury-heavy balance sheet.
  • S&P inclusion upside: If added, index funds could buy ~8.5M shares (15% of float), per Jefferies estimates.
  • Accounting edge: Fair-value rules let MSTR borrow against Bitcoin holdings without selling, funding more buys .

But it’s polarizing. Monness Crespi Hardt slapped a "Sell" rating in April, warning MSTR trades at a 175% premium to its Bitcoin holdings. If BTC stumbles, that premium could vaporize fast. Most bulls counter that the premium reflects MSTR’s unique role as a regulated Bitcoin proxy—especially for institutions avoiding direct crypto exposure .

Coinbase’s Next Move: Beyond the Exchange

Coinbase isn’t just an exchange anymore. Its June product blitz targeted payments and decentralization:

  • Coinbase Business: Lets companies send/receive crypto payments, auto-sync with QuickBooks. Aims to slash payment fees for SMBs.
  • DEX integration: Users can now trade tokens from Coinbase’s app, even new ones not listed yet. Assets stay in self-custody wallets.
  • Coinbase One Card: Amex-powered credit card pays up to 4% back in Bitcoin .

This isn’t random. CEO Brian Armstrong’s betting that onchain payments (stablecoins + Base network) will be crypto’s next mainstream use case. 81% of crypto-aware SMBs want stablecoins for cheaper cross-border payments. And with the GENIUS Act, Coinbase’s payments revenue could overtake trading by 2026 .

The S&P Committee’s Dilemma: Innovation vs. Tradition

MicroStrategy’s S&P 500 case puts the index committee in a tough spot. On one hand, MSTR’s $113B market cap dwarfs 80% of current members. It’s profitable, liquid, and U.S.-based—all standard checks. But critics say it’s a Bitcoin vehicle, not a software company. Its "operating business" (analytics tools) generated just $111M last quarter—down 3.6% YoY. Bitcoin holdings? 575x larger .

History offers clues. When Tesla joined the S&P in 2020, skeptics called it a car company cosplaying as tech. It worked because Tesla made things. MSTR doesn’t build with Bitcoin; it accumulates. The committee might punt by demanding more diversified revenue. Or they could embrace crypto as a new asset class, much like they did with Coinbase’s May inclusion. Either way, September’s decision will signal how traditional finance views Bitcoin’s maturity .

A man in a suit and tie seated at a table, speaking into a microphone during a formal event.

Risks Beyond the Hype: What Could Go Wrong

  • Bitcoin volatility: If BTC drops below $95,240 before June 30, MSTR’s Q2 earnings could miss S&P’s profit requirement. Odds are low (9% historically over 6 days), but possible .
  • Stablecoin regulation delay: The House must reconcile the GENIUS Act with its own bill (STABLE). Lobbying over state vs. federal oversight could stall it .
  • MSTR’s premium: At 175% above its Bitcoin holdings’ value, any BTC dip could crush shares harder than the crypto itself .
  • Interest rates: If the Fed doesn’t cut rates as expected, MSTR’s preferred shares (STRK/STRF) lose their yield appeal .

FAQs: Your MicroStrategy and Coinbase Questions, Answered

Q: When will we know if MicroStrategy joins the S&P 500?
A: The committee announces additions quarterly, with the next window around September 20. If MSTR qualifies, it could be added then .

Q: How does Coinbase make money from stablecoins?
A: It earns 100% of interest on USDC held on its platform, plus 50% of Circle’s total USDC revenue (fees, settlements). This generated ~$410M last quarter .

Q: Are STRK and STRF safe if Bitcoin crashes?
A: Not really. Their yields rely on MSTR’s financial health. A big BTC drop could hurt its ability to pay dividends, sinking preferred share prices .

Q: What’s the GENIUS Act’s next step?
A: It passed the Senate but needs House approval. Differences exist—the House bill (STABLE) splits oversight among multiple regulators, while GENIUS centralizes it under Treasury. A compromise is needed .

Citing My Link Sources:

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