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It’s official. Cryptocurrency exchange firm Coinbase (COIN) has made its public debut on the stock exchange in a wild first day of trading. That means its stock is now publicly available to purchase. Here’s how you can buy in from South Africa.
Coinbase is now trading on the NASDAQ, which means you’ll need a share trading platform that offers US stocks.
The whole process can take as little as 15 minutes.
A direct listing is different to a traditional IPO in a number of important ways.
In a traditional IPO, an underwriter (typically an investment bank) purchases pre-IPO stock before selling it on to investors. Their job is to mitigate any risks, set the IPO stock price and determine how many shares should be issued to the market.
With a direct listing, there is no underwriter involved and no newly issued stock. Instead, existing private shareholders and employees of Coinbase sell their stock directly to the market.
The benefit is that it costs less for the company and Coinbase does not need to convince institutional investors to buy in ahead of going public. However it could also lead to higher volatility on the day of the IPO.
It’s impossible to predict how any stock will perform — and IPOs can be particularly volatile. But evaluating the performance of companies like Coinbase can be useful in determining how the market is performing and whether now is a good time to invest in this industry.
Select a company to learn more about what they do and how their stock performs, including market capitalisation, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn’t include every stock available.
Coinbase is the largest cryptocurrency exchange in the US, with over 43 million verified users and US$90 billion in platform assets. Its global network is over 115,000 partners strong and spans 100 countries. Private trading of its shares in March 2021 suggests a US$90 billion valuation, up US$13 billion from its February valuation.
With the release of Coinbase’s S-1 filing, we were able to take a closer look at the company’s financials.
|As of December 31, 2019||As of December 31, 2020|
|Coinbase revenue||US$533.7 million||US$1.27 billion|
|Coinbase net income (loss)||(US$30.3 million)||US$127.4 million|
In 2019, Coinbase reported US$533.7 million in revenue and a net loss of US$30.3 million. In 2020, its revenue rose to US$1.27 billion and it reported a profit of US$127.4 million.
Rising revenue and falling losses is a promising trend — so long as Coinbase can continue its profit-making trajectory. But no investment is free from risk and the inherent volatility of the crypto sector may prove a determining factor in Coinbase’s profitability.
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