Coinbase joining S&P 500, replacing Discover Financial

Coinbase, the popular cryptocurrency exchange, is making headlines once again as it joins the prestigious S&P 500 index, replacing Discover Financial Services. This announcement has caused a surge in Coinbase’s stock price, with shares jumping 8% in extended trading. The change is set to take effect on May 19, as Discover is in the process of being acquired by Capital One Financial.

Since going public through a direct listing in 2021, Coinbase has solidified its position in the U.S. financial system. The rise of Bitcoin, with its value soaring and large institutions gaining regulatory approval for spot Bitcoin exchange-traded funds, has played a significant role in Coinbase’s growth. Bitcoin recently spiked, surpassing $100,000 and nearing its all-time high reached in January.

Despite its success, Coinbase’s stock has been volatile, trading well below its peak from late 2021. The stock closed on Monday at $207.22, giving the company a market cap of $53 billion, significantly lower than its peak of over $357. However, companies added to the S&P 500 often experience an increase in value as funds that track the index add them to their portfolios.

The S&P 500 index, known for its heavy weighting towards tech companies, continues to diversify by adding companies from various sectors. In recent months, companies like Dell, Palantir, Super Micro Computer, and CrowdStrike have been included in the index. To qualify for inclusion in the S&P 500, a company must have reported a profit in its latest quarter and have cumulative profit over the four most recent quarters.

In its latest financial report, Coinbase reported a net income of $65.6 million, down from $1.18 billion a year earlier, after accounting for the fair value of its crypto investments. Revenue rose by 24% to $2.03 billion from $1.64 billion a year ago. Additionally, Coinbase announced plans to acquire Dubai-based Deribit, a major crypto derivatives exchange, for $2.9 billion, marking the largest deal in the crypto industry to date.

Despite the positive news, Coinbase’s shares have underperformed this year, with a 17% decline compared to Bitcoin’s 10% increase. As the cryptocurrency market continues to evolve and gain mainstream acceptance, Coinbase remains a key player in the industry.

Overall, Coinbase’s inclusion in the S&P 500 is a significant milestone for the company, solidifying its position in the financial world and paving the way for future growth and success. Investors and cryptocurrency enthusiasts alike will be closely watching as Coinbase continues to make waves in the ever-changing digital asset landscape.