Coinbase is about to become the first and only crypto company to join the S & P 500, an event that symbolizes a great feat for the industry but also has significant positive implications for investors. On Monday evening, S & P Dow Jones Indices announced that the crypto exchange operator will be added to the benchmark S & P 500 stock index before trading begins on May 19. It will replace Discover Financial Services , which is being acquired by Capital One Financial . Coinbase jumped nearly 24% on Tuesday, erasing its year-to-date loss. "Coinbase has gone from being in an intense litigation with the SEC just a few months back (later dropped by the SEC under the Trump regime) to being the latest addition to S & P 500," said Bernstein analyst Gautam Chhugani. "This event symbolizes the dramatic turnaround in fortunes for the crypto industry and its rising significance as the frontier of financial innovation." Coinbase at its current market cap would form 0.1% of the total index, and about 0.7% of the financials sector allocation, he noted. "Getting into the S & P 500 not only increases purchases from index funds, but also puts COIN under a closer radar of non-index funds that benchmark against the S & P 500," Oppenheimer analyst Owen Lau said in a note Tuesday. "Lack of deep institutional ownership was a bear thesis for COIN, but it has now become a strong tailwind." COIN YTD mountain Coinbase YTD Oppenheimer raised its price target on the shares to $293 from $279, assuming "increased institutional demand and support for the stock." Lau added that the news could also help the price performance of Coinbase decouple from the price movement of cryptocurrencies. A confluence of risk-off sentiment, tariff uncertainty and a lack of action by Congress to move crypto regulation forward has created a tough environment for cryptocurrencies other than bitcoin . Smilarly, Benchmark's Mark Palmer said the development "will position [Coinbase] to benefit from passive investment flows into funds that track the index, such as the SPDR S & P 500 ETF Trust (SPY), that will be required to purchase shares of COIN to match the index. This additional source of buying pressure should help to support the company's share price." To be included in the S & P 500, a company needs to be listed on a U.S. exchange, have at least $18 billion in market cap, most of its shares held by the public and profitable in the most recent quarter as well as the last four quarters. The update comes just four years after Coinbase went public through a direct listing in 2021. CEO Brian Armstrong said on the company's quarterly earnings call last week that the crypto platform aims to become one of the biggest financial services companies in the world in a few years , aided by traditional players who continue adopting crypto at an accelerating rate. Coinbase also last week announced plans to buy Dubai-based Deribit , a major crypto derivatives exchange for $2.9 billion. The deal, which is the largest in the crypto industry to date, will help Coinbase broaden its footprint outside the U.S. —CNBC's Michael Bloom contributed reporting.
