On the 4pm shut of buying and selling in New York, MicroStrategy will hear the willpower of its extremely anticipated bid to affix the distinguished NASDAQ 100 index. The well-publicized occasion has already attracted bids from traders who view MicroStrategy as extremely certified for approval.
After the NASDAQ committee’s announcement, there are a number of different catalysts on the horizon for MicroStrategy, together with year-end tax loss harvesting, the presidential inauguration, and quarterly earnings bulletins.
Nevertheless, along with these, there’s additionally an idiosyncratic catalyst on its near-term calendar: a bitcoin (BTC)-specific, Monetary Accounting Requirements Board (FASB) rule change.
The FASB establishes typically accepted accounting rules (GAAP) for US public corporations and maintains monetary accounting and reporting requirements for Securities and Change Fee (SEC) filings.
In its rulebook, the FASB forces public corporations to deal with BTC property in a way that disadvantages MicroStrategy on its stability sheet and earnings experiences.
Particularly, the FASB has categorized BTC as an “indefinite-lived intangible asset.” As related to monetary experiences, this designation requires a public firm to completely mark down the worth when its BTC declines in USD value.
Quite than an asset on a stability sheet that may subsequently improve in worth, the FASB has solely allowed BTC losses to cross via as an expense/loss on the earnings assertion.
MicroStrategy CEO Michael Saylor had been lobbying the FASB to alter its BTC accounting guidelines for years. The board has agreed to implement his recommendations beginning January 1, 2025, per rule change ASU 2023-08.
No extra everlasting mark-downs for bitcoin
In consequence, MicroStrategy will quickly be capable to checklist its bitcoin holdings on its stability sheet at its present USD worth — together with will increase from quarter to quarter.
FASB Adoption, $MSTR Earnings, & S&P500
After a lot analysis and fruitful dialogue with others, it is a revision to my prior understanding the place I wrongly believed $MSTR would report earnings in Q1-2025 reflecting everything of their unrealized #Bitcoin positive aspects at honest… pic.twitter.com/kN3gU1Yv1P
— Richard Haas (@RichardAHaas) December 13, 2024
On its first-quarter earnings assertion — and each quarter thereafter — the FASB will lastly allow MicroStrategy to checklist each constructive and detrimental value adjustments of its bitcoin because the begin of every quarter.
Along with enhanced transparency and a standardized quantity on MicroStrategy financials that quantitative merchants can simply evaluate throughout 1000’s of shares, this FASB rule change may even impression one other catalyst.
By permitting MicroStrategy to acknowledge its USD positive aspects from BTC’s appreciation, these values will enhance MicroStrategy’s candidacy for different indices that use GAAP reporting requirements, together with the world’s largest index, the S&P 500.
