Strategy tumbles on concern MSCI could drop it from indexes

How far did Strategy shares fall?

Strategy (Nasdaq: MSTR) shares tumbled 6.5% on Thursday to $114.41, down from $122.35 the session before. The company lost $3.2 billion in market value, leaving it worth $46 billion.

Why it matters: Trading was heavy, with $2.3 billion of shares changing hands. The broader market moved far less: the S&P 500 fell 0.4%.

By the numbers: The stock now sits 49.1% below its 52-week high of $224.61.

Why does MSCI's index decision matter for Strategy?

MSCI builds stock indexes that many funds copy automatically. Reuters reported that MSCI will remove Strategy from its global indexes on Dec. 1. Reuters said MSCI judged the company closer to an investment fund than an operating business.

When a stock leaves an index, funds that track that index generally sell it. In an interview with crypto commentator Scott Melker, Yusko discussed estimates putting $3 billion to $8 billion of fund flows at risk.

Those figures measure potential exposure, not confirmed selling. The actual effect depends on index providers and on passive investors, meaning funds that track an index instead of picking stocks. JPMorgan has estimated that outflows could be larger if other index providers follow MSCI.

Yusko also questioned why Strategy should face different index rules than investment-heavy companies such as Berkshire Hathaway.

What does bitcoin have to do with it?

Yusko, founder of Morgan Creek Capital Management, said bitcoin's break below $75,000 disrupted its pattern of higher highs and higher lows. "A lower low is a lower low," he said.

He pointed to several pressures. Heavy use of borrowed money through leveraged stock funds and options raises the risk of forced selling. Margin calls, when brokers demand cash after borrowed bets lose value, may push investors to sell bitcoin and gold. Momentum-driven computer trading and hedge funds cutting risk could add to the decline, he said.

Yusko still follows bitcoin's long-running market cycle. He said stronger upward momentum could emerge in 2027.

How much does this reach a broad index fund?

Very little. Strategy accounts for 0.05% of the value of the 500 largest U.S. companies. Its drop took $3 from $100,000 spread across them by size.

A direct holder carried the full move. On $100,000 in Strategy stock, Thursday's drop cost $6,490. The next marker is Dec. 1, the removal date Reuters reported.