Coinbase Shares Surge 24% Following S&P 500 Inclusion Announcement
Coinbase (COIN) shares experienced a significant surge of 24% on May 13, 2025. This marked their largest one-day gain since Donald Trump’s election victory. The spike followed the announcement that Coinbase would be included in the S&P 500 Index, replacing Discover Financial Services, which is being acquired by Capital One Financial, as reported by CNBC.
Impact on Coinbase-Heavy ETFs
Coinbase’s addition to the S&P 500 has heightened interest in several ETFs closely tied to the company. Notable funds include the First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT), Global X Blockchain ETF (BKCH), Fidelity Crypto Industry and Digital Payments ETF (FDIG), and the Roundhill COIN WeeklyPay ETF (COIW).
Given their substantial holdings in COIN shares, these ETFs saw notable increases: CRPT rose by 7.4%, BKCH by 6.8%, FDIG by 6.7%, and COIW surged 30% on the same day.
S&P 500 Inclusion Sparks Increased Buying Interest
Typically, stocks added to the S&P 500 witness an uptick in their prices, driven by passive funds and ETFs that must buy shares to align with the index. To qualify for S&P 500 inclusion, a company must show profitability in its most recent quarter and cumulatively over the last four quarters.
Coinbase met these criteria with a net income of $65.6 million in its latest earnings report, although this figure represents a drop from $1.18 billion a year prior, influenced by adjustments related to crypto valuations. Year-over-year revenues increased by 24% to $2.03 billion.
Election Impact on Coinbase Stock
Coinbase shares closely track political movements, particularly Donald Trump’s return to the White House. The stock rose 31% on November 6, the day after the election, as expectations mounted for a more favorable regulatory environment for cryptocurrency.
However, 2025 has been challenging for Coinbase, with share drops of 26% in February and 20% in March due to market uncertainties stemming from Trump’s tariff announcements. Despite the recent rally, shares are down by 0.1% year-to-date.
Positive Industry Sentiment Amid Deregulation Hopes
As Trump’s new term begins, early actions such as deregulation and an executive order to establish a strategic Bitcoin reserve have generated optimism within the crypto industry. Yet, legislative progress remains stalled amid controversy over Trump’s personal crypto ventures, including a meme coin initiative linked to his family.
In broader market trends, Bitcoin recently surpassed $100,000, invigorating sentiment for Coinbase and other crypto-related assets.
Strategic Move: $2.9 Billion Acquisition of Deribit
Last week, Coinbase announced a significant $2.9 billion acquisition of Deribit, a prominent crypto derivatives exchange headquartered in Dubai. This acquisition, the largest in the crypto sector so far, is poised to enhance Coinbase’s international presence and diversify its revenue streams beyond the U.S. market.
Future Prospects for COIN
Analysts have revised down their earnings estimates for COIN shares over the past week, suggesting potential challenges ahead. Three of six analysts have lowered their earnings forecasts for the June quarter, and four of five have cut projections for the current fiscal year.
Image Source: Zacks Investment Research
Evaluating COIN Stock Valuation
Currently, COIN shares are trading at a price-to-earnings ratio (P/E) of 29.52, significantly higher than the negative 8.75 of the underlying Financial – Miscellaneous Services industry. Additionally, the price/cash flow ratio for COIN stands at 23.84, compared to 10.77 for its peer group, raising concerns about overvaluation.
Conclusion
Coinbase is navigating several growth drivers; however, the company’s fundamentals and valuation face pressures. Investors may consider entering the stock through ETFs to mitigate specific risks associated with individual company exposure.
