MicroStrategy will remain in MSCI’s standard equity indexes following the latest semi-annual review, preserving its exposure to a broad base of global institutional investors. MSCI confirmed that it will initiate a comprehensive review this summer to evaluate whether investment-oriented companies like MicroStrategy, which holds a large digital asset portfolio, should continue to qualify for inclusion. For the time being, the company’s approximate $5 billion market capitalization and adherence to minimum free-float requirements met MSCI’s thresholds, averting an immediate reclassification that could have led to outflows of an estimated $1.2 billion in passive fund assets.

In its fourth quarter earnings report, MicroStrategy recorded an unrealized loss of $17.44 billion on its bitcoin holdings, driven by bitcoin’s price volatility. The loss contributed to a 47.5% decline in the company’s share price during the reporting period. Despite generating $44 million of operating income from software licensing, the marked-to-market impact of digital asset valuations overshadowed core business profitability, prompting analysts to lower their full-year earnings forecasts by an average of 15%.

To mitigate balance-sheet risk, MicroStrategy secured a $1.6 billion revolving credit facility in December and drew down $825 million in the first quarter, increasing its cash position to roughly $2.3 billion. The company also instituted a policy to raise equity capital if bitcoin’s price drops by more than 40% from its most recent peak, aiming to maintain a minimum cash buffer equal to 20% of the carrying value of its digital assets. These measures are designed to bolster liquidity and provide optionality for asset purchases or debt servicing as market swings persist.