Coinbase set to join S&P 500 next week; shares jump

Investing.com-- Shares of Coinbase Global (NASDAQ:COIN) surged over 24% on Tuesday as the top U.S. cryptocurrency exchange was set to join the S&P 500 index, replacing Discover Financial Services (NYSE:DFS).

The inclusion, effective May 19, marks a milestone for Coinbase, reflecting its growing prominence in the financial sector. 

The move follows Capital One Financial (NYSE:COF) receiving approval for the acquisition of Discover, where the deal is expected to close on May 18.

Coinbase will be classified under the financials sector in the benchmark index, S&P Dow Jones Indices said in a statement.

Analysts at Oppenheimer described the S&P 500 inclusion as a "watershed moment" for the company. 

"We have been predicting this as one of the key catalysts for COIN in 2025, and it has finally arrived. We believe the inclusion has huge implications for COIN and the crypto industry as a whole," the firm said in a note to clients. They explained that 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.

"Lack of deep institutional ownership was a bear thesis for COIN, but it has now become a strong tailwind. We are raising our PT to $293 assuming increased institutional demand and support for the stock," concluded Oppenheimer.

Elsewhere, Monness Crespi Hardt analyst Gus Gala upgraded the stock to Buy and set a $300 price target following the S&P 500 inclusion.  "... we did not account for a +35% increase in ETH tied to Pectra upgrade and what now looks to be a very conservative guide," the analyst commented. "Accordingly, we move back to Buy."  He called index addition "gravy."

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Last week, the crypto exchange reported a drop in first-quarter profit, which also missed Street expectations. 

The company had also announced that it would acquire crypto derivatives platform Deribit for $2.9 billion in cash and equity. 

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