Coinbase, which has no official headquarters, opted to avoid an initial public offering (IPO) and instead directly list its shares on the Nasdaq stock exchange, without relying on Wall Street investment banks serving as underwriters to set the pricing.
Later City News: Coinbase is going to be held widely. “What is fascinating about Coinbase is this is the first way in which individuals can take part in this new market for cryptocurrencies without being subject themselves to the volatility those currencies have,” Michael Wolf, the chief executive officer and co-founder of Activate, a technology consulting firm, said on Bloomberg Television.
Yahoo! Finance reported that such offerings are unusual, and market makers have typically needed hours to determine the appropriate opening price. When Slack, the business communication software, went public via a direct listing in June 2019, it took about two and a half hours to start trading. “The stock opened just after noon,” according to a Wall Street Journal story at the time.
While historical experience with such direct listings suggested that trading might not go live until later in the day, financial news services were reporting early indications of the pricing.
Around 1:04 p.m. ET, Reuters reported that Coinbase was indicated to start trading at $380, well above the reference price of $250 published late Tuesday by Nasdaq. The stock ticker is COIN.
“The price of COIN will be very volatile,” said James Angel, a finance professor at Georgetown University who specializes in financial-market structure. “We can expect it to fluctuate along with the prices of cryptocurrencies. Investors should buckle up their seatbelts and expect a wild ride.”
The Coinbase listing is shaping up as a watershed moment for the cryptocurrency industry, with the biggest U.S. exchange now getting exposure to mainstream stock-market investors. The event has also been tabbed as a catalyst that might drive further adoption of digital assets.
Prices for bitcoin, the biggest cryptocurrency by market value, soared Wednesday to a new all-time high above $64,000, settling back to about $63,500 as of press time. Ether, the native cryptocurrency of the Ethereum blockchain and the second-biggest overall, also rose to a record price of around $2,400.
“COIN listing is the validation of an investment thesis that crypto is not a niche market anymore,” Campbell Harvey, a professor of international business at Duke University, told CoinDesk. “It is a new mainstream market.”
Even Coinbase’s competitors are getting in on the action: Binance, the world’s largest cryptocurrency exchange, announced Wednesday it will list a digital token backed by Coinbase shares.
Based on Coinbase's closing price on Wednesday, the company commanded a fully diluted valuation of about $86 billion following its direct listing. That gave Coinbase, the largest cryptocurrency exchange in the U.S., a larger market capitalization than other major legacy exchanges, including the Intercontinental Exchange (ICE), CME Group (CME) and the Nasdaq (NDAQ). At session highs on Wednesday, Coinbase's valuation exceeded $112 billion, nearing the market capitalization of Goldman Sachs (GS).
"It may be the right stock, but just the wrong price right now, hence the volatility," David Nelson, chief strategist at Belpointe Asset Management, told Yahoo Finance.
Coinbase has consistently created new venture capital funding records in crypto, so it’s befitting that the exchange might now move forward with the first direct listing in the space.
The company’s growth prospects have become the subject of a great deal of analyst speculation after a blowout first-quarter earnings presentation last week that showed off the profitability of the company but also the volatility of its business model.
The exchange reported $1.8 billion in revenue for the quarter (versus $1.27 billion for the full year 2020). Coinbase gave no revenue guidance (as a publicly traded company normally would), but instead gave scenarios for user growth depending on different outcomes in the crypto market. It reported 6.1 million active users in the first quarter, more than double the number during the final quarter of 2020.
Fortune caught up with Emilie Choi, Coinbase’s president and chief operating officer, ahead of the company’s market debut to discuss its implications. The former LinkedIn executive, who sits on the boards of Naspers and ZipRecruiter, noted that the cryptocurrency industry “is not for the faint of heart.”
The conversation ranged from the timing of Coinbase’s listing, to the amenability of the regulatory environment in the U.S., to the possibility that [hotlink]Google[/hotlink] or [hotlink]Amazon[/hotlink] could enter the cryptocurrency market. Choi also discussed the company’s controversial valuation and the likelihood of another investment-freezing “crypto winter.”
Coinbase’s listing marks the arrival of a once-niche mania colliding head on with the mainstream financial world. “This is the moment for crypto to shine,” Choi said.
Accordingly on Thursday 15th April 2021, Coinbase Global Inc. is the most valuable U.S. exchange Wednesday amid strong demand for the cryptocurrency platform’s newly public stock.
Market Watch reported that shares of Coinbase COIN, 1.41% began trading at $381 a share at 1:25 p.m. Eastern on Wednesday, after a $250 reference price was established Tuesday afternoon, and pushed as high as $429.54 before ending its first day of trading at $328.28. Coinbase held a direct listing instead of a standard initial public offering, meaning that the company didn’t raise money through the process of going public and doesn’t have a traditional IPO price against which to measure the stock’s first-day rally.
At the closing price, Coinbase was valued at $85.8 billion on a diluted basis. CME Group Inc. CME, -1.04%, the next-most-valuable U.S. exchange, has a market capitalization of about $74 billion.
Later city, End//
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