Coinbase has been announced as the newest addition to the S&P 500 index, set to replace Discover Financial Services, as per a release made public on Monday. Following the announcement, shares of the cryptocurrency trading platform surged by 8% during after-hours trading.
The transition to the S&P 500 is scheduled to take place prior to the market opening on May 19. Discover Financial is currently in the process of being acquired by Capital One Financial, prompting this change.
Since its public debut via a direct listing in 2021, Coinbase’s role within the U.S. financial landscape has significantly increased. The cryptocurrency has seen a remarkable rise in value, catalyzed by large financial institutions receiving regulatory approval for launching spot bitcoin exchange-traded funds.
Despite these developments, shares of Coinbase have exhibited considerable volatility and trade at a price substantially lower than their all-time high from late 2021. The stock closed at $207.22 on Monday, which translates to a market capitalization of $53 billion. In contrast, the stock once peaked above $357.
Typically, shares added to the S&P 500 experience price increases as funds that track the index purchase them for their portfolios.
The S&P 500, which is predominantly tech-focused due to the substantial market capitalizations of industry leaders, continues to expand its representation from various sectors. In September, the index saw the inclusion of major companies such as Dell and Palantir, alongside other technological firms like Super Micro Computer and security software company CrowdStrike throughout the previous year.
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