Coinbase Stock Is Ripping Despite Hack Fears—Here's Why

Coinbase’s stock jumped 9% on Friday following its addition to the S&P 500 and subsequent upgrade by analysts, and despite the crypto exchange’s admissions earlier this week that it had suffered a major data breach and remains under investigation by federal regulators.

Benchmark Equity Research raised its target for Coinbase’s stock to $301 on Friday—a 19% increase from its previous prediction of $252, according to the firm's May 16 report.

Coinbase shares closed at $266.32—a rebound from the previous days’ dip that seemed to be triggered by news that cybercriminals had stolen customer data and tried to blackmail the firm and that it remained the target of a regulatory investigation.

COIN has maintained a “buy” rating as its inclusion in the S&P 500 positions it to attract more inflows, Benchmark analyst Mark Palmer wrote Friday.

“The company’s addition will position it to benefit from passive investment flows into funds that track the index…that will be required to purchase COIN shares to match the index,” Palmer said in the report. “This additional source of buying pressure should support the company’s share price.”

COIN's rally follows the trading platform's inclusion in the S&P 500, making it the first and only crypto company to rank among the U.S’ top 500 publicly traded companies by market capitalization. Coinbase stock jumped more than 20% following the announcement.

The company acquired crypto exchange Deribit earlier this month—a move that is poised to expand Coinbase's global footprint by expanding its derivatives offerings for institutional and retail traders. Around that time, the firm also reported a 24% increase in its total revenue for the first quarter compared to the year-prior quarter, largely driven by the growth of its transaction revenue and subscriptions and services. The firm also booked higher revenue from its partnership with stablecoin issuer Circle.

That spate of good news trumped two developments on Thursday.

Coinbase revealed that it had received a letter from cyber criminals demanding $20 million in Bitcoin for the return of customer data that had been stolen. Coinbase CEO Brian Armstrong said Thursday in a video published on X that the company would not comply with the demands.

That same day, the company also confirmed to The New York Times that it remains under investigation by the U.S. Securities and Exchange Commission, despite the agency’s pro-crypto pivot over the past few months.

Edited by James Rubin