Key Takeaways
- Coinbase Soars 24%: Shares jumped 24% after joining the S&P 500, boosting institutional interest.
- Revenue Up 24%: Despite volatility, Coinbase’s revenue grew 24%, and it’s acquiring Deribit for $ 2.9 B.
- Bitcoin Up 50%: Bitcoin surpassed $100K, rising 50% since the election amid regulatory optimism.
Coinbase Soars After S&P 500 Inclusion
Coinbase (COIN) shares surged 24% on Tuesday to $256.90, marking their sharpest rally since the day after Donald Trump’s 2016 election victory. The jump followed news of Coinbase’s inclusion in the S&P 500, replacing Discover Financial Services, which is set to be acquired by Capital One Financial in a $35.3 billion all-stock deal closing May 18. The inclusion takes effect before trading on Monday, and the addition is considered a major milestone for both Coinbase and the broader crypto sector.
Stocks entering the S&P 500 typically see price increases as funds tracking the index, like the SPDR S&P 500 ETF Trust, are forced to buy them. Coinbase’s market cap hit $52.78 billion at Tuesday’s close, and Oppenheimer analysts called the move a “watershed moment,” raising their stock price target to $293 from $269.
Crypto Optimism Rises With Trump’s Return
The rally adds to a volatile period for Coinbase, which previously rocketed 31% on November 6, the day after Trump’s reelection, driven by optimism about a more crypto-friendly administration. Bitcoin, the world’s largest cryptocurrency, has climbed roughly 50% since the election, recently spiking above $100,000 and reaching $104,000 on Tuesday.
However, Coinbase stock is still down about 30% from its record close of $357.39 in November 2021. CEO Brian Armstrong, a major backer of the crypto political movement, personally donated over $1.3 million to various candidates, while Coinbase contributed more than $75 million to the pro-crypto PAC Fairshake and its affiliates. Armstrong celebrated the S&P 500 news on X, writing, “Crypto is here to stay.”
Financial Performance and Strategic Expansion
Despite the favorable shift in regulatory tone under Trump, including an executive order to create a strategic bitcoin reserve, progress on legislation has stalled amid concerns about Trump’s personal crypto ventures. Coinbase also faced turbulence earlier in the year, with stock plunges of 26% in February and 20% in March following Trump’s tariff announcements.
Yet, after Tuesday’s rally, Coinbase shares are up about 3.5% year-to-date. The company recently reported net income of $65.6 million, or 24 cents a share, for the latest quarter, down from $1.18 billion, or $4.40 per share, a year earlier, largely due to changes in crypto asset valuation. Revenue rose 24% year-over-year to $2.03 billion. Furthering its global expansion, Coinbase announced a $2.9 billion acquisition of Dubai-based Deribit, marking the largest deal in the crypto industry’s history.
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