Coinbase (COIN) Surges After Becoming the First Cryptocurrency Firm to Join the S&P 500

Coinbase (COIN) shares surged more than 14% on Tuesday after the cryptocurrency firm was named as the latest addition to the S&P 500 index, marking a milestone moment for cryptocurrencies.

Coinbase will replace Discover Financial (DFS) in the S&P 500, the change set to take effect before market open on 19 May, S&P Dow Jones Indices announced. The move will add Coinbase to the portfolios of index-tracking funds.

Analysts at Oppenheimer said the inclusion of Coinbase could create sustained institutional demand for the firm’s stock, and accordingly raised their price target on Coinbase to $293, from $270. They also said they expect the stock to be included in the S&P 100 at a later stage.

“We view this inclusion as a watershed moment for the digital asset sector and a strong vote of confidence in Coinbase’s business model and leadership,” the analysts said.

Coinbase has been focused on building its institutional business and expanding into new markets. Last week, the firm announced a $2.9 billion deal to acquire crypto derivatives exchange Deribit.

Coinbase also reported a decline in first-quarter profit as revenue fell from the prior year, continuing a trend from the fourth quarter. However, the firm continues to benefit from a recovering digital asset market, with trading activity picking up during the period.

Coinbase shares have fallen nearly 17% in 2023 up until Monday’s close, making the S&P addition a potential turning point for the stock.

Investors will be watching to see how quickly new inflows from index funds and exchange-traded fund managers materialize, and whether Coinbase follows through with more strategic acquisitions to expand its business.