What Happened?
Shares of blockchain infrastructure company Coinbase (NASDAQ:COIN) jumped 22.9% in the afternoon session after the S&P Dow Jones Indices announced that the company would join the S&P 500 Index before the start of trading on Monday, May 19, 2025. The S&P 500 is a widely followed index that tracks the performance of the 500 largest companies in the United States.
Being included in the Index means that Coinbase will likely be held by many mutual funds and ETFs, which could potentially drive up demand for the stock. We note that while buying of the stock could increase, this development does not change the fundamentals of the company. Revenue growth, expense efficiency, and capital intensity of the business, for instance, are not impacted by index inclusion or exclusion, so this is more of a technical tailwind for the stock.
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What The Market Is Telling Us
Coinbase’s shares are extremely volatile and have had 66 moves greater than 5% over the last year. But moves this big are rare even for Coinbase and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 6.8% on the news that the company announced the acquisition of Deribit for $ 2.9 billion to expand its capabilities in the rapidly growing derivatives market. The deal was made to cater to institutional investors and retail traders who are increasingly more sophisticated. The stock's reaction suggests that the market thinks the deal will strengthen COIN's competitiveness and improve its growth trajectory in the crypto space.
Coinbase is down 1.5% since the beginning of the year, and at $253.50 per share, it is trading 26.2% below its 52-week high of $343.62 from December 2024. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $771.95.
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