Home Stock Coinbase IPO: Everything you need to know about 'watershed moments' in crypto

Coinbase IPO: Everything you need to know about ‘watershed moments’ in crypto


Coinbase is the talk of Wall Street, as the largest cryptocurrency platform in the US prepares to go public on a traditional Wednesday, via a live listing.

Without a doubt, the public release of Coinbase is a big deal in the world of crypto. The company was founded just over a decade ago with the origins of bitcoin
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and is currently in the midst of a time that many industry insiders have described as a tipping point.

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There are a number of ways to get direct ownership of cryptocurrencies, in addition to buying them directly, a service that Coinbase offers for a fee and what investors appear willing to pay.

Coinbase, where users mainly trade in bitcoin and ethereum, last week reported that their revenue grew 847% in the first quarter to $ 1.8 billion and now has 56 million users confirmed. intelligence.

Leeor Shimron, an analyst at FundStrat Global Advisors, describes the Coinbase listing as nominal. “Coinbase’s direct listing is a turning point for the crypto industry.”

Wedbush analyst Dan Ives said the list reflects the mainstream development of the cryptocurrency.

“In our opinion, Coinbase is a cornerstone of the cryptocurrency ecosystem and a barometer for the growing mainstream adoption of Bitcoin and cryptocurrencies over the coming years,” he wrote in a Tuesday research notes.

Some note that the prices are implied for Coinbase as a lofty cryptocurrency exchange, compared to traditional stock exchanges like the Nasdaq Inc.
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,
where Coinbase will directly list and the Intercontinental Exchange
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,
the parent company of the New York Stock Exchange.

In direct listing, a company puts its stock on a stock exchange, but doesn’t need to hire a bank to underwrite the transaction, like in an IPO.

Here’s what you need to know about the upcoming offering.

What is Coinbase?

Silicon Valley crypto exchange was co-founded in 2012 by Brian Armstrong, 38, who runs the platform as chief executive. Fred Ehrsam, a Coinbase director, also helped found the company.

According to ForbesArmstrong’s net worth is now $ 6.5 billion based on his ownership in the company and his fortune will likely increase if a direct listing is successful.

When will Coinbase be public?

Coinbase will go public on April 14. The exact timing of the listing is not clear but Palantir Technologies Inc.’S
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live list in September See its first transaction after 1:30 pm Eastern Time.

Where will it be listed?

Coinbase is set to be publicly listed on the Nasdaq under the token symbol “COIN” in the form of a direct listing, meaning it doesn’t raise any new funds, like a company that does a traditional IPO.

Coinbase is Nasdaq’s first major live listing, with Spotify
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,
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and most recently Palantir Technologies
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all choose to list directly on the NYSE.

Valuation?

Nasdaq gave it to Coinbase Reference price is $ 250 a share on Wednesday night, valuing it at over $ 65 billion.

Some bulls are predicting a valuation at $ 100 billion or higher, which will make it bigger than some U.S. exchanges, including ICE, Nasdaq, CME Group.
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and Cboe Global Markets
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.

David Trainer, CEO of New Constructs, an investment research firm, says the value of a cryptocurrency platform is strangely high. “Despite Coinbase’s revenue skyrocketing over the past 12 months, the company has little chance of meeting its future profit expectations, which are placed at an absurdly high expected valuation,” he said. is 100 billion dollars.

“Coinbase’s $ 100 billion projected valuation implies that its revenue will be 1.5 times the combined 2020 revenue of two of the oldest exchanges on the market, Nasdaq Inc. (NDAQ) and the Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, ”he said.

Trainer says that based on his calculations, Coinbase’s valuation will be closer to $ 18.9 billion – an 81% drop from the expected $ 100 billion valuation.

‘Not for the faint of heart’

MoffettNathanson analyst Lisa Ellis explained to MarketWatch why the offer was offered, as she describes it “not for the faint of heart”, but why she started. reporting on an exchange that buys with a price target of $ 600, even before it appears to trade on the Nasdaq for the first time.

“I am extremely optimistic on Coinbase… because you get the feeling that they are the market leaders in the space and agnostic about cryptocurrencies,” she said.

That said, she admits that currently 90% of Coinbase’s revenue comes directly from retail transactions, with most of them in the US and transactions mainly focused on the two largest cryptocurrencies: bitcoin and Ether
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on the ethereum blockchain.

“So as a consequence Coinbase revenue is correlated with the level of activity of cryptocurrencies and in particular bitcoin and ether.”

Ellis says that investors need at least a year of long-term investment strategy in bitcoin, which may still go to zero for some discount accounts, but the three-year outlook is even better, because the complex of cryptocurrencies tends to run boom and then go bankrupt.

Cryptocurrency validation or top?

Some bulls see Coinbase as an endorsement for the fledgling industry.

Alex Mashinsky, head of crypto trading and lending platform Celsius Network, says this:

“We see the Coinbase listing as an additional validation of the space and a huge PR opportunity for the entire industry to shine like the future of finance,” he told MarketWatch via email.

“Coinbase has more users and more revenue than many of Wall Street’s biggest players and is more profitable than any major exchange, and this validation has left most skeptics reevaluating. Their rejection and frustration with the disruption that came from them. in all aspects. “

Others claim that it could demonstrate a new high for the market and put the cryptocurrency’s price under pressure after a sharp rally in recent days and a new record for bitcoin.

Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co. based in Montreal, told MarketWatch that he fears there is too much excitement surrounding bitcoin and cryptocurrencies and as a result it will have to quit. “Can you find anyone with a discount opinion?” he asks. Lamoureux said: “No.

Is Coinbase the largest cryptocurrency exchange?

Coinbase is the second largest, but largest, cryptocurrency platform in the United States, by volume. The biggest title goes to Binance, with $ 47 billion in cryptocurrency trading volume over a 24 hour period, according to CoinMarketCap.com.

Who else owns Coinbase?

The venture capital firm Andreessen Horowitz, which is the largest owner of Coinbase, boasts about 25% of the Class A and 14% of the B stakes. And Marc Andreessen, the head of the venture capital division. , sitting on the board of Coinbase.

Other events

For those looking to dig deeper into Coinbase, check out MarketWatch’s 5 things to know about the company.

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