Coinbase IPO: Everything You Need To Know About The Crypto ‘Turning Point’

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Coinbase is the talking point on Wall Street on Wednesday, as the largest crypto platform in the United States gears up for its public debut on a traditional exchange, arriving via a direct listing rather than a more traditional initial public offering.

The arrival on the public markets of Coinbase COIN,
+1.28%
is a big time in the world of cryptocurrencies. The company was formed a little over a decade ago with the genesis of bitcoin BTCUSD,
-0.95%
and stands today at what many in the industry have described as a tipping point.

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There are few ways to secure direct ownership of cryptocurrencies outside of direct purchase, a service Coinbase provides for a fee and for which investors seem willing to pay.

Additional market: This new ETF gives you access to the backbone of the crypto world

Coinbase, whose users primarily deal in bitcoin and ethereum, announced last week that its revenue had climbed 847% in the first quarter to $ 1.8 billion, and now stands at 56 million. verified users.

Leeor Shimron, analyst at FundStrat Global Advisors, called Coinbase’s listing seminal. “Coinbase’s direct listing is a watershed moment for the crypto industry.”

Wedbush analyst Dan Ives said the list reflects the arrival of cryptocurrencies into the mainstream. “Coinbase is a fundamental part of the crypto ecosystem and is a barometer of the growing adoption of bitcoin and crypto for years to come in our opinion,” he wrote in a research note on Tuesday.

Some caution against the fact that the implicit valuation of Coinbase as a crypto exchange has grown too high, compared to traditional exchanges like Nasdaq Inc. NDAQ,
+ 0.17%,
where Coinbase will be directly listed, and Intercontinental Exchange ICE,
-0.57%,
the parent company of the New York Stock Exchange.

In a direct listing, a company lists its shares on the stock exchange but without engaging banks to guarantee the transaction as in an IPO.

Here’s what you need to know about the Coinbase listing.

What is Coinbase?

The Silicon Valley crypto exchange was co-founded in 2012 by Brian Armstrong, 38, who runs the platform as a managing director. Fred Ehrsam, a director of Coinbase, was also instrumental in founding the business.

According to ForbesArmstrong’s net worth is currently $ 6.5 billion, based on his stake in the business, and his wealth is likely to increase if direct enrollment is successful.

When will Coinbase go public?

The Coinbase listing is expected to hit the Nasdaq on Wednesday. The precise timing of the listing is unclear, but Palantir Technologies Inc.’s PLTR,
+ 1.13%
direct registration in September saw the first trade of its first session after 1:30 p.m. EST.

Where will it be listed?

Coinbase is set to go public on the Nasdaq under the ticker “COIN” as a direct listing, which means it doesn’t raise new funds like a company would in a traditional IPO.

Coinbase is the first major direct listing on the Nasdaq, along with Spotify SPOT,
+1.53%,
Slack Technologies WORK
and most recently, Palantir has all chosen to list directly with the NYSE.

Assessments?

Nasdaq subpoenaed Coinbase a reference price of $ 250 an action Tuesday evening, which values ​​it at more than 65 billion dollars. On Wednesday, Coinbase stock was expected to open around $ 350, or 40% above its benchmark price.

Some bulls are projecting a valuation of $ 100 billion or better, which would make it larger than a number of US stock traders including ICE, Nasdaq, CME Group CME,
-0.63%
and Cboe Global Markets CBOE,
-0.60%.

David Trainer, CEO of investment research firm New Constructs, said the crypto platform’s value is ridiculously high. “Even though Coinbase’s revenue has grown over the past 12 months, the company has little to no chance of meeting the expectations of future profits that are built into its ridiculously high expected valuation of $ 100 billion,” he said. -he declares.

Coinbase’s expected valuation of $ 100 billion implies that its revenue will be 1.5 [times] the combined 2020 revenues of two of the market’s most established exchanges, ”namely parent company NYSE ICE and Nasdaq.

Trainer said that based on his calculations, Coinbase’s valuation is expected to be closer to $ 18.9 billion, down 81% from the expected valuation of $ 100 billion.

“Not for the faint of heart”

MoffettNathanson analyst Lisa Ellis told MarketWatch why the offer is, as she described it, “not for the faint of heart,” even as she kicked off coverage of the exchange at a buy with a target price of $ 600, before the stock has seen its price. first transaction on the Nasdaq.

“I’m super super bullish on Coinbase… because you feel like they’re a market leader in space and crypto-agnostic,” she said.

That said, she acknowledged that 90% of Coinbase’s revenue currently comes directly from retail, with most of it in the United States, and the trade being primarily focused on the two largest cryptocurrencies: bitcoin and Ether ETHUSD.
-1.77%
on the ethereum blockchain.

“The implication, then, is that Coinbase’s income is correlated with the level of activity in cryptocurrency and in particular bitcoin and ether.”

Ellis said investors should have a long-term investment strategy with at least a one-year horizon in bitcoin, which could still go to zero through some bearish accounts, but a three-year outlook is better because the Crypto complexes have tended to operate in three-year cycles of boom and bust.

Validation for crypto or a top?

Some bulls see Coinbase’s arrival on the stock market as a validation of the nascent crpyto industry.

Alex Mashinsky, head of the cryptocurrency lending and trading platform Celsius Network, put it this way in an email to MarketWatch: “We see the Coinbase listing as further validation of space and a major public relations opportunity for the entire industry as the future of finance.

Coinbase, he said, “has more users and more revenue than most of the biggest players on Wall Street and is more profitable than any major exchange, and this validation puts most skeptics in mind. crossroads [of] having to reassess their denial and frustration in the face of the disturbances that hit them from all sides. “

Others suggest this could turn out to be a new high for the market and put crypto prices under pressure after a precipitous rally in recent days and a new high for bitcoin.

Yves Lamoureux, president of Montreal-based macro research firm Lamoureux & Co., told MarketWatch that he fears euphoria surrounds bitcoin and cryptos and sees them as a result for layoff. “Can you find someone with a bearish point of view? ” He asked. “A categorical no,” he replied.

Is Coinbase the biggest crypto exchange?

Coinbase is the second largest crypto platform, but the largest in the United States, by volume. The largest stock goes to Binance, which records $ 47 billion in crypto trading volume over a 24-hour period, according to CoinMarketCap.com.

Who else owns Coinbase?

Venture capital firm Andreessen Horowitz is the largest owner of Coinbase, owning around 25% of Class A and 14 %% Class B shares. Marc Andreessen, head of the venture capital firm, sits on the board of administration of Coinbase.

Other facts

For those who want an even deeper dive into Coinbase, check out MarketWatch 5 things to know about the company.


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