Coinbase Stock Soars Over 10% on Imminent S&P 500 Debut

Coinbase shares jumped more than 10% in after-hours trading on Monday following confirmation that the exchange will join the S&P 500 Index next week.

S&P Dow Jones Indices said Coinbase will replace Discover Financial Services ahead of trading on May 19.

The milestone comes as Coinbase marks over three years since its direct listing on Nasdaq, making it the largest publicly traded pure-play crypto firm. The exchange now boasts a market value of roughly $53b.

Coinbase just became the first and only crypto company to join the S&P 500.

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Investors have rewarded the company with a roughly 260% gain over the past two years despite turbulence across the sector. High-profile scandals and the collapse of major platforms triggered sharp sell-offs, while the stock fell nearly 17% this year even as Bitcoin climbed close to 10%.

In order to qualify for S&P 500 inclusion, companies must report positive earnings in the most recent quarter and cumulatively across the prior four quarters.

Coinbase’s results have been volatile. The firm posted strong revenue of $7.4b in 2021 but swung to a loss of $1.1b dollars in the second quarter of 2022.

In the first quarter of this year, revenue rose about 24% compared with the same period last year to $2b, although it slipped about 10% from the fourth quarter. Net income fell 94% to $66m as the exchange marked its crypto holdings to market.

Meanwhile, Coinbase revealed plans to acquire Deribit for $2.9b, one of the largest deals in the industry’s history. The move comes amid renewed deal-making spurred by returning political support for digital assets.

Under the current administration, regulators have taken a more permissive stance toward crypto firms. Rival platforms such as Bullish, Gemini and Kraken have already signalled plans to pursue public listings in the more favourable climate.

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