Coinbase stock jumps 8% as S&P 500 inclusion promises broader exposure

• Coinbase (COIN) shares surged over 8% after-hours on news of its S&P 500 inclusion.
• Coinbase will replace Discover Financial in the index effective before market open on May 19.
• The inclusion marks a significant milestone, giving broad investor/portfolio exposure to a crypto firm.

Shares of cryptocurrency exchange Coinbase (COIN) experienced a significant surge in after-hours trading on Monday following the landmark announcement that the company will be added to the prestigious S&P 500 stock index.

This inclusion marks a pivotal moment for Coinbase and the broader digital asset industry, signaling increased mainstream acceptance and potentially ushering in a new wave of investor exposure.

A new entrant to Wall Street’s premier index

Coinbase is set to join the S&P 500, which tracks 500 of the largest publicly traded US companies across diverse sectors, effective before the market opens on May 19.

According to an S&P press release, Coinbase will replace Discover Financial Services (DFS) in the index, as Discover is currently in the process of being acquired by Capital One.

With a market capitalization nearing $53 billion, Coinbase, which currently trades on the Nasdaq exchange, will soon rub shoulders with Wall Street titans like Apple, Microsoft, Amazon, and Google within the S&P 500.

Crypto gains mainstream exposure

The inclusion of a crypto-focused company like Coinbase in such a widely followed benchmark index is a significant development.

It means that millions of everyday investors, as well as numerous model portfolios and index-tracking funds, will now gain direct exposure to the digital asset sector through their holdings.

The anticipated impact on trading volume is substantial. “COIN about to be in every portfolio in America,” commented Juan Leon, senior investment strategist at asset manager Bitwise, in a post on X (formerly Twitter).

He projected, “The S&P 500 inclusion is going to force 7x the daily trading volume into [the] stock,” as index funds rebalance their portfolios to include the new constituent.

News of the impending S&P 500 inclusion sparked immediate investor excitement.

Coinbase shares jumped to as high as $225 in post-market trading, an increase of 8.6%, building upon a nearly 4% gain achieved during Monday’s regular trading session.

Coinbase’s journey and eligibility

This milestone comes just over three years after Coinbase’s public debut on the Nasdaq in 2021, at which time it had a market capitalization of $52.78 billion.

While its current share price (closing at $207.22 on Monday) remains below its 2021 peak (above $357), the company has increasingly bridged the gap between the crypto world and traditional finance, particularly as institutional interest in digital assets has grown.

Eligibility for the S&P 500 is stringent, requiring companies to report a profit in their most recent quarter and demonstrate cumulative profitability over the preceding four quarters.

According to CNBC reports, Coinbase has met all these criteria.

The company recently reported a profit of $65.6 million for its latest quarter. While this is a significant decrease from the $1.18 billion profit reported a year prior, its revenue has shown healthy year-over-year growth of approximately 24%, reaching $2.03 billion.

Coinbase’s addition to the S&P 500, which already includes a diverse range of technology companies beyond just large-cap tech, follows other recent tech-related inclusions such as Dell, Palantir, Super Micro Computer, and CrowdStrike, reflecting the evolving composition of the US economic landscape.