Coinbase IPO pops and dropsThe crypto world is abuzz as crypto giant Coinbase goes public under the ticker COIN. Prices pop and drop, but end the day on a high.
The platform went public in a direct listing on NASDAQ, but rejected the traditional IPO process of using investment banks to manage the deal. Nasdaq provided a reference price of $250 the night before, but because it’s a direct listing no shares changed hands at that price. Shares opened on April 14 at $381 (well above its reference price) and quickly shot up to a whopping $429.54, before closing at $328.28: giving the exchange an initial market cap of $85.8 billion.
The company was founded in San Francisco in 2012 with the aim of “building the crypto economy - a more fair, efficient and transparent financial system enabled by crypto.” And it seems to have done it, with revenue for Q1 2021 already higher than its entire 2020 revenue (847% higher, to be precise.) Sure, that’s driven in part by the crazy ride that crypto has been on over the past few months, but Coinbase has been a big part of that journey. It pioneered remote working (the company doesn’t even have an official physical headquarters), and over the past decade has become the biggest cryptocurrency platform in the U.S., specializing primarily in Bitcoin and Ethereum.
Its last formal valuation was in 2018 when it accepted $300 million in financing and got a valuation of $8 billion. Things have changed a bit since then: private market valuations for the company stood at around $68 billion as of Q1 and there have been rumors that its market cap could soon top $100 billion after the company reported stellar Q1 numbers last week.
Not only did revenue increase ninefold from $1.28 billion in the whole of 2020 to a whopping $1.8 billion in just Q1 of 2021, and verified users jump from 43 million in December 2020 to 56 million in March, but trading volumes for the quarter also rose to $335 billion. If Coinbase carries on at its current Q1 rate, its revenues could reach $7.2 billion for FY 2021 - but there are still those out there advising caution – mainly Bitcoin bears who think the currency has reached its peak.
Either way, the listing is a watershed moment for the crypto industry, and Wedbush analyst Dan Ives thinks that
Coinbase is a foundational piece of the crypto ecosystem and is a barometer for the growing mainstream adoption of Bitcoin and crypto for the coming years.
Not everyone is so gung-ho.
Investing in Coinbase is not for the faint of heart, as the business — and the stock — will likely see dramatic, potentially protracted, swings
warned Lisa Ellis of MoffettNathanson. She’s still bullish though, initiating coverage of Coinbase with a Buy rating and a $600 one-year price target, equating to a market cap of $123 billion.
What the listing does do, however, is place cryptocurrency firmly on the mainstream map, and this is why the IPO is so important – no matter how well (or otherwise) the stock itself eventually performs. Coinbase’s debut
will mark the first official juncture between the traditional financial avenue and the alternative crypto path
wrote a senior analyst at Swissquote, Ipek Ozkardeskaya.
As such, a successful addition to Nasdaq should act as endorsement of cryptocurrencies by traditional investors.