According to the latest developments reported by Bloomberg, Coinbase, the largest cryptocurrency exchange in the United States, is preparing to join the S&P 500.
The S&P 500 (Standard & Poor’s 500) is a market cap weighted stock index that measures the performance of the 500 largest public companies traded on the US stock exchange. This is one of the most followed indicators for investors to track the overall health of the US economy and the performance of the stock market.
To include a company in the S&P 500 index, certain strict conditions must be met by the S&P Dow Jones index. First, the company must be a US-based company headquartered in the US. It is also generally expected to have a market capitalization of at least $15 billion. This threshold may be updated over time.
The company’s stock must be very liquid. That is, they are traded in large quantities regularly. Free floats are also important. At least 50% of the stock must be on the free float. From an economic standpoint, the company must earn a positive net profit over the past four quarters. Additionally, these shares must be traded on major US exchanges such as NYSE, NASDAQ and CBOE.
Companies that meet these criteria are regularly monitored and evaluated by the S&P Dow Jones Indices team. If a company is deemed appropriate, it may remove another company from the index or be added to the list by the committee during periodic updates of the index. Once a change decision is made, this information will usually be made public a few days in advance.
*This is not investment advice.
