On Tuesday, shares of Coinbase Global Inc. soared—as in up 24% on the day—on news that they’d be listed on the S&P 500. It’s the company’s largest one-day gain since the day after Donald Trump’s election victory back in 2016. Just two days before our sample day, Coinbase made headlines being added to the S&P 500 index. Beyond its potential effects on the marketplace, this news illustrates how quickly the company is becoming a key player in the U.S. financial landscape.
In fact, last week Coinbase filed its Q3 2023 earnings report. The report showed a net income of 65.6 million, or 24 cents per share. This figure represents a stunning decline from the $1.18 billion declared last year. That’s equal to a drop from $4.40/share. However, even with this decrease, the company’s revenue increased by 24%, hitting $2.03 billion compared to $1.64 billion at the same time last year. The one-two punch of these impressive financial results and now being added to the S&P 500 helped bring back tepid investor confidence.
Coinbase shares have undergone significant volatility recently, plummeting 26% in February and 20% in March due to market instability triggered by Trump’s tariff announcements. On November 6, the day after the election, that company jumped 31% to record highs. Crucially, all this growth was driven by speculation on the new administration’s reportedly more crypto-friendly policies.
Coinbase’s surprisingly large contribution has already caused a stir. Through the Coinbase political action committee, CEO Brian Armstrong has directly donated more than $1.3 million to individual candidates. The corporate giant ranked as one of the leading corporate donors. It singlehandedly poured more than $75 million into a pro-Fairshake political action committee and its affiliates. This level of political engagement highlights Coinbase’s clearly stated goals of advancing pro-crypto candidates and influencing policy decisions these candidates make.
With its proposed acquisition of FairX, Coinbase is making some serious moves to broaden its market footprint. They recently made headlines with plans to buy Deribit, a leader in crypto derivatives exchange based in Dubai for $2.9B. This agreement represents the largest purchase in the crypto space to date. It seeks to expand Coinbase’s reach internationally and cut its reliance on the U.S. market.
Last week, it seemed like all of cryptocurrency was celebrating. This week, Bitcoin surged through the $100,000 mark, topping $104,000 on Tuesday and approaching its historic high of nearly $105,000 set in mid-January. Coinbase’s grip on the financial system only seems to have tightened since its direct listing in 2021. Investors are understandably watching these changes to assess their potential impact on the company’s future direction.
Tuesday’s rally aside, Coinbase’s stock is up roughly 3.5% on the year, evidence of a growing resilience to larger market fluctuations.
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