In a historic event for cryptocurrency, the largest digital currency exchange marketplace Coinbase Global Inc. (COIN) is making its public debut on Wednesday in a highly-anticipated public debut after the company executed a direct listing.
Coinbase shares opened at $381 today, representing approximately a 52% increase from its reference price of $250; the new price represents a valuation of $99.6 billion compared to the $65.3 billion valuation based on the reference price. Both valuations are on a fully-diluted basis.
The direct listing is a historic moment as Coinbase, founded in 2012, is the first cryptocurrency and digital exchange marketplace to go public. This comes after major corporations like Tesla have stated that they will accept digital currencies as payment.
In a blog post, Coinbase co-founder and CEO Brian Armstrong stated, “Today’s listing is a milestone, but it’s not as important as every new day in front of us. Coinbase has an ambitious mission: to increase economic freedom in the world. Everyone deserves access to financial services that can help them build a better life for themselves and their families. We have a lot of hard work to do to make this a reality.”
“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 in our opinion,” Wedbush analyst Dan Ives wrote in a research note Tuesday as stated on MarketWatch.
According to Coinbase’s prospectus filed with the Securities and Exchange Commission up to 114,850,769 shares of its Class A common stock is available in the resale of its shares on Nasdaq. It notes that previously, there was no public market for its Class A common stock. Additionally, “(u)nlike an initial public offering, (as a direct listing) the resale by the registered stockholders is not being underwritten by an investment bank.” The prospectus states that in 2020, Coinbase had 2.8 million transacting monthly users and 43 million verified users. Moreover, as of December 31, 2020, Coinbase customers traded more than $456 billion on the platform since inception and stored more than $90 billion worth of assets. Recently, Coinbase reported that its revenue increased 847% in Q1 2021 to $1.8 billion and it now has 56 million verified users.
Reportedly, risk factors include that: “operating results have and will significantly fluctuate due to the highly volatile nature of crypto”; its “net revenue is substantially dependent on the prices of crypto assets and volume of transaction conducted on (its) platform. If such price or volume declines, (its) business, operating results, and financial condition would be adversely affected.” The company also listed the risk of cyberattacks or security breaches, regulation, negative publicity and social media coverage, changes in investor confidence, and competition, among a variety of other risk factors, highlighting the volatility of the risks.
According to the prospectus, Goldman Sachs & Co. LLC, is Coinbase’s designated financial and J.P. Morgan Securities LLC, Allen & Company LLC, and Citigroup Global Markets Inc. are also listed as advisors.