Coinbase joins the S&P 500 with goals of dominating Wall Street

Coinbase is getting pulled into the core of traditional finance. On Monday, the company was picked to join the S&P 500, replacing Discover Financial Services in the index. And its mission is to take over Wall Street.

The change will go live before the opening bell on May 19, and the move immediately triggered an 8% jump in extended trading for the crypto exchange’s stock. The announcement came as Discover is being acquired by Capital One Financial.

This is the latest addition to the benchmark index, which leans heavily on tech firms and includes names with some of the biggest market caps on the planet. Since it went public in 2021 through a direct listing, Coinbase has gotten more involved in the US financial system.

That rise has come with bitcoin’s value climbing, and several major institutions now being cleared to launch spot bitcoin ETFs. Coinbase’s reach has grown, but so has the volatility surrounding its stock.

Coinbase earns its spot with fresh profits

To enter the S&P 500, a company needs to show profit in its most recent quarter and positive cumulative profit across the last four quarters. Coinbase checked that box in its latest earnings. The company posted net income of $65.6 million, or 24 cents per share, down from $1.18 billion, or $4.40 per share, in the same quarter last year. Even though that drop was sharp, the company still made money, and that opened the door.

Revenue increased 24%, landing at $2.03 billion, up from $1.64 billion a year ago. Coinbase’s stock closed Monday at $207.22, giving it a market value of $53 billion. That’s a long way down from the $357 high it hit in late 2021, but it’s still big enough to draw the attention of index fund managers who now have no choice but to buy it. That’s the reality for any company that lands on the S&P 500—index funds following the benchmark are forced to rebalance and include the new name. That usually adds demand.

The S&P is adding Coinbase at a time when it’s already been expanding with names across the broader tech world. In September, both Dell and Palantir were brought in. Before them, Super Micro Computer and CrowdStrike joined the list.

Traders push the market through key barriers

Oh but the market went hard on Monday. The S&P 500 jumped 3.3% and flew past its 200-day moving average, a technical line that had been treated like a ceiling by a lot of traders. That didn’t stop the buying. Stocks kept climbing through the day without giving back momentum.

That includes names like Tesla, which gained nearly 7%, Apple, which rose 6%, and Nvidia, which moved up 5%. Companies with a heavy link to Chinese supply chains also surged—Best Buy went up 6%, Dell gained almost 8%, and Amazon added more than 8%.

The momentum hasn’t just lifted a few stocks. The entire Nasdaq index is now within 1% of turning positive for the year. If it clears the 5,881.63 level, it closed at on December 31, it’ll officially be back in the green.