Coinbase is set to join the S&P 500, replacing Discover Financial Services, as announced on Monday. The change will take effect before the market opens on May 19. Discover is currently in the process of being acquired by Capital One Financial. This move comes just a few years after Coinbase went public through a direct listing in 2021. Since then, it has grown significantly within the U.S. financial system, benefiting from the rise in bitcoin’s value and the approval of large institutions to create bitcoin exchange-traded funds.
The price of bitcoin spiked recently, surpassing $100,000 and nearing its all-time high from January. Despite this, Coinbase has experienced volatility, and its stock is currently trading well below its peak value from late 2021. The company’s shares closed at $207.22 on Monday, giving it a market capitalization of $53 billion. At its highest point, Coinbase’s stock traded above $357.
Typically, stocks added to the S&P 500 see a rise in value as funds that track the index include the stock in their portfolios. The S&P 500 continues to add companies from across various sectors, with technology companies making up a significant portion due to their large market caps. In the past year, companies like Dell, Palantir, Super Micro Computer, and CrowdStrike have been added to the index.
For a company to be included in the S&P 500, it must have reported a profit in its most recent quarter and demonstrated cumulative profits over the four most recent quarters. Coinbase met these criteria when it reported a net income of $65.6 million, or 24 cents a share, last week. This was a significant decline from the previous year, when the company posted net income of $1.18 billion, or $4.40 per share. However, revenue grew by 24% year-over-year, rising from $1.64 billion to $2.03 billion.
In addition, Coinbase announced plans to acquire Deribit, a Dubai-based crypto derivatives exchange, for $2.9 billion. This acquisition represents the largest deal in the crypto industry and will help Coinbase expand its presence beyond the U.S. Despite the recent gains in bitcoin, Coinbase’s stock has underperformed this year, falling 17%, compared to bitcoin’s 10% increase.
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