Coinbase becomes first crypto-native company in S&P 500
Coinbase is set to join the S&P 500 index on May 19, replacing Discover Financial Services, as reported by CNBC. Discover Financial Services is in the process of being acquired by Capital One.
The change comes as Coinbase draws interest from both institutional and retail investors. Shares jumped 8% in after-hours trading following the announcement.
Coinbase will be the first cryptocurrency-native firm in the S&P 500 and reflects crypto’s growing presence in mainstream finance, especially as more institutions win approval for Bitcoin exchange-traded funds.
The company went public in 2021 and has expanded its role in the US financial system. Yet its stock value remains far below its all-time high. On Monday, Coinbase closed at $207.22 per share, down from its peak of over $357 in 2021. Its current market cap stands at $53 billion. To be included, a company must post a profit in its most recent quarter and show cumulative earnings over the past year.
Companies added to the S&P 500 often see a bump in share price, since funds tracking the index must buy in. Coinbase will now sit alongside other tech-forward firms recently added, like Dell, Palantir, Super Micro Computer, and CrowdStrike.
Coinbase reported net income of $65.6 million for the first quarter, or 24 cents per share. A year ago, net income stood at $1.18 billion, or $4.40 per share, reflecting a much stronger cryptocurrency market at the time. Adjusted for cryptocurrency investment swings, the latest quarter’s profit was $527 million, or $1.94 per share.
Revenue rose 24% year over year to $2.03 billion, though that missed Wall Street’s estimate of $2.12 billion. Most of the income came from transaction fees, which totalled $1.26 billion. Subscription and services added $698 million.
Consumer trading volume dropped 17% to $78.1 billion from the previous quarter, while institutional volume fell 9% to $315 billion. Activity had spiked late last year following the election of Donald Trump, who is seen as more cryptocurrency-friendly by many in the industry.
In April, Coinbase earned $240 million in transaction revenue, despite cryptocurrency prices becoming more volatile again. That volatility was linked to uncertainty over Trump’s proposed tariffs, which made some investors hesitant to stay in risk-heavy assets.
For the second quarter, Coinbase expects subscription and service revenue of between $600 million and $680 million. It also expects stablecoin income to drop slightly, offset by lower blockchain rewards due to falling token prices.
Coinbase is also looking to expand overseas. Last week, it announced plans to acquire Deribit, a cryptocurrency derivatives exchange based in Dubai, for $2.9 billion. The deal is one of the largest in cryptocurrency history and could help the company diversify its revenue beyond US markets.
The exchange has seen growth in its derivatives business, which it says is gaining market share. Still, Coinbase stock remains down 17% for the year, trailing Bitcoin, which is up around 10% over the same period.
CFO Alesia Haas called the S&P 500 inclusion a “major milestone” for Coinbase and for cryptocurrency as a whole.
“Joining this prestigious index reflects how far Coinbase and the industry have come and is a signal of where the world is heading,” Haas said.
Coinbase now joins the ranks of other major corporate Bitcoin holders already in the S&P 500, including Tesla and Block Inc.
(Photo by Unsplash)
See also: Trump’s not sure if he cashed in on his own crypto
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