Coinbase IPO could be a historic meeting of traditional finance and cryptocurrency

Posted: 14 April 2021 11:31 am
News

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The much-anticipated public listing comes amidst unprecedented interest in both cryptocurrencies and stocks.

With a speculated valuation of more than $100bn, the Coinbase public listing marks a significant moment for the cryptocurrency industry.

What is Coinbase?

Founded in 2012 by Brian Armstrong, Coinbase is now the leading US-based cryptocurrency exchange, and is used by more than 56 million people around the world. It’s first quarter revenue was estimated at $1.8bn, thanks to a renewed interest in cryptocurrencies from both retail and institutional investors.

When does it go public?

Coinbase is due to list on the Nasdaq under the ticker “COIN” on Wednesday 14 April, but the exact listing time has yet to be established. Unlike most initial public offerings (IPOs), Coinbase will be using a direct listing, which means the current privately held shares will be sold directly to buyers on the stock market, without the need for an intermediary.

How much is it likely to be worth?

On Tuesday, the Nasdaq announced that Coinbase shares (COIN) would have a reference price of $250, which would give the company an initial valuation of almost $50bn. However, this reference price is only intended as a guide, and the actual listing price could be much higher. Pre-market Coinbase shares were trading for around $600 on rival exchange FTX.

Coinbase also pledged to give 100 shares to each of its 1,700 employees, which would be worth $25,000 based on the Nasdaq’s reference price.

What does this mean for crypto?

Many experts see the Coinbase listing as validation for the wider cryptocurrency industry, adding legitimacy to a market that is known for its extreme volatility and speculative cycles. However, others see the expected valuations for Coinbase as a sign that the company is overvalued, especially given how it compares to stock exchanges like the Nasdaq itself.

But the Coinbase listing is just one of a number of positive developments for the crypto industry, along with a wave of institutional interest in bitcoin, and companies like Visa, Mastercard and PayPal announcing they will offer cryptocurrency transactions in future.

Bitcoin itself has also responded well to the news, and was trading at a new all-time-high of more than $64,000 as of Wednesday.

This article offers general information about investing and the stock market, but should not be construed as personal investment advice. It has been provided without consideration of your personal circumstances or objectives. It should not be interpreted as an inducement, invitation or recommendation relating to any of the products listed or referred to. The value of investments can fall as well as rise, and you may get back less than you invested, so your capital is at risk. Past performance is no guarantee of future results. If you're not sure which investments are right for you, please get financial advice. The author holds no positions in any share mentioned.

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