Is MSTR safe? Not at all!

Upon closer examination of MSCI's issues regarding cryptocurrency indices, I found a neglected point. The original text mentioned that "MSCI will not implement any increases to the Number of Shares (NOS)." This means that the newly issued shares through ATM will not be counted towards the weight of the MSCI index under the current MSCI processing rules, and thus will not trigger passive fund purchases.

In other words, the newly issued stocks from ATM are invisible to MSCI. All newly issued stocks will not be counted by MSCI, which means no institutions will passively buy them. MSCI acknowledges the existence of cryptocurrency reserve stocks but refuses to continue providing passive funding for ATM's new issuance.

Under normal circumstances, if a company's circulating shares increase, such as through a new issuance or the lifting of restrictions on major shareholders, MSCI typically increases its NOS, thereby raising its weight in the index. This would force global ETFs to buy the stock, potentially leading to a rise in its price. However, MSCI's announcement not to increase NOS means cutting off this potential incremental funding. Even if the company actually issues more shares, passive funds will not follow up with purchases.

The rule specifically names METAPLANET and CAPITAL B, but $MSTR appeared in the subsequent supplementary list, so MSTR will also be affected by this regulation.

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