Yesterday, Coinbase had its best trading day in years. The stock shot up by nearly 24% after S&P Dow Jones Indices announced the company will be added to the S&P 500 index. Coinbase will replace Discover Financial Services, which is set to merge with Capital One. The change takes effect before trading opens on Monday, May 19.
Coinbase is the first cryptocurrency-focused company to be added to the S&P 500. The inclusion was triggered by the company meeting the necessary criteria, including market capitalization, profitability, and liquidity standards.
Following the news, Coinbase’s market capitalization increased by approximately $8 billion. The company’s stock closed at $256.90, up $49.68 from the previous day.
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What Inclusion Means for the Stock
Inclusion in the S&P 500 typically leads to increased demand for a stock, as index-tracking funds are required to add it to their portfolios. This can result in elevated trading volumes and, in some cases, significant price movement in the lead-up to the effective date.
Analysts at Oppenheimer raised their price target for Coinbase shares to $293, citing expectations of greater institutional demand. The firm’s research described the S&P 500 addition as a potential catalyst for both Coinbase and broader investor interest in crypto-related equities.
Recent Performance and Financials
The stock’s surge on Tuesday puts it roughly flat for the year, recovering from earlier declines. Coinbase had experienced notable volatility in recent months, with drops of 26% in February and 20% in March, partially driven by broader market reactions to new U.S. trade tariffs and related economic uncertainty.
In its most recent quarterly earnings report, Coinbase posted net income of $65.6 million, or $0.24 per share. This was down from $1.18 billion, or $4.40 per share, during the same quarter last year. Revenue for the period rose 24% to $2.03 billion.
The company also confirmed last week its intention to acquire Deribit, a major crypto derivatives exchange based in Dubai, for $2.9 billion. The acquisition is expected to expand Coinbase’s presence in international markets and diversify its services beyond spot trading.
Historical Context and Market Reaction
The 24% surge from yesterday is the largest single-day percentage gain for Coinbase stock since November 2024, when the company rallied after U.S. presidential election results. The company and its leadership were among the significant financial backers of pro-crypto candidates in the 2024 election cycle.
Coinbase’s inclusion in the S&P 500 follows months of speculation. The company had previously been considered a candidate for inclusion but was not selected in the last quarterly rebalancing. Eligibility for the index requires positive earnings in the most recent quarter, as well as cumulatively across the past four quarters.
S&P 500 index rules also mandate a minimum market cap and liquidity requirements, which Coinbase now fulfills. Its stock has traded on the Nasdaq since its direct listing in April 2021.
A Milestone for the Crypto Industry
Beyond the stock price reaction, the S&P 500 inclusion is being viewed as a milestone for the cryptocurrency sector. While several crypto-related firms have gone public over the past few years, Coinbase is the first to join the most recognized index of large-cap U.S. equities.
This marks a shift in how digital asset businesses are perceived by traditional finance. A company operating in the crypto space gaining entry into the S&P 500 may indicate growing acceptance of the sector within mainstream markets.
Index membership also brings with it increased scrutiny, as well as access to a broader investor base. Passive funds, pensions, and other institutions that mirror the S&P 500 will now hold Coinbase in their portfolios – exposing the crypto industry to audiences that previously may not have interacted with it directly.
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