Coinbase Set to Join S&P 500 Following Recent Bitcoin Surge

Coinbase, the prominent cryptocurrency exchange, is slated for inclusion in the prestigious S&P 500 index starting next week. This development follows the announcement that Discover Financial's shares will be removed from the index due to an impending acquisition.

The decision was made public on Monday, with the formal transition expected to occur on May 19. Following the announcement, Coinbase's stock experienced a significant uptick in value, a common trend associated with such index inclusions as investment funds that track the S&P 500 begin to acquire shares.

Coinbase's addition to the index comes amid fluctuating share prices closely linked to the performance of Bitcoin. Since its public debut in April 2021, Coinbase's stock peaked in late 2021 at over $300 per share. However, the following year saw a substantial decline, with prices dropping below $50. A recovery began towards the end of 2023, with shares surpassing the $300 mark again by late 2024, only to experience another downturn. Currently, shares are trading at approximately $207, still significantly below their peak value.

To qualify for inclusion in the S&P 500, a company must demonstrate profitability in the most recent quarter, along with a total net profit across the last four quarters. Recently, Coinbase announced its intention to acquire the Dubai-based cryptocurrency trading platform Deribit for $2.9 billion. Additionally, in early March, the U.S. Securities and Exchange Commission concluded a lengthy investigation into Coinbase regarding the trading of potentially unregistered financial products. However, the firm is currently facing a lawsuit in Oregon related to these past issues.

As Coinbase prepares for its new status within the S&P 500, it joins a growing list of technology firms that have been added to the index, including DoorDash, Dell, Palantir, Supermicro, and CrowdStrike in recent months.