Coinbase is the talk of Wall Street, as the largest crypto platform in the United States on a traditional exchange on Wednesday through a direct listing ready for its public debut.
There is no doubt that the public offering of Coinbase is a big deal in the world of crypto. The company was founded just over a decade ago with the emergence of bitcoin BTCUSD,
and is now in the middle of a moment that many in the industry have described as a tipping point.
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There are few ways to obtain direct ownership of cryptocurrencies, other than buying them directly, a service that Coinbase offers for a fee, and for which investors apparently want to pay.
Coinbase, whose users mainly deal with bitcoin and ethereum, reported last week that its revenue rose 847% to $ 1.8 billion in the first quarter, and now has 56 million verified users.
LeeS Shimron, analyst at FundStrat Global Advisors, described the Coinbase listing as an important description. “The direct listing of Coinbase is a watershed moment for the crypto industry.”
Wedbush analyst Dan Ives said the presentation is a reflection of the mainstream evolution of the crypto.
“Coinbase is a fundamental part of the crypto ecosystem and we believe is a barometer of the growing general use of Bitcoin and crypto for years to come,” he wrote in a research note on Tuesday.
Some warn that the implied valuations for Coinbase as a crypto exchange are too high compared to traditional stock exchanges such as Nasdaq Inc. NDAQ,
where Coinbase will list directly, and Intercontinental Exchange ICE,
the parent company of the New York Stock Exchange.
In a direct listing, a company trades its shares on a stock exchange, but without hiring banks to endorse the transaction, as in a stock exchange.
Here’s what you need to know about the upcoming offer.
What is Coinbase?
The Silicon Valley crypto exchange was co-founded in 2012 by Brian Armstrong, 38, who runs the platform as CEO. Fred Ehrsam, a director of Coinbase, also helped create the company.
According to Forbes, Armstrong’s network value is currently $ 6.5 billion based on his ownership in the company and his wealth is likely to increase if the direct listing is successful.
When will Coinbase be announced?
Coinbase will appear on April 14. The exact timing of the list is not clear, but it is Palantir Technologies Ingsee PLTR,
live listing in September, its first trading took place after 13:30 Eastern Time.
Where will it appear?
Coinbase will be published on the Nasdaq under the symbol ‘COIN’ as a direct listing, meaning that it will not raise any new money, as a company would do under a traditional stock exchange.
Coinbase is the first major direct listing of Nasdaq, with Spotify SPOT,
Slack Technologies WORK,
and recently Palantir Technologies PLTR,
everyone prefers to list directly with the NYSE.
Valuations?
Nasdaq offered Coinbase a reference price of $ 250 per share on Wednesday night, valued at more than $ 65 billion.
Some bulls project a valuation of $ 100 billion or better, which will make it larger than a number of US stock exchanges, including ICE, Nasdaq, CME Group CME,
and CBOE Global Markets CBOE,
David Trainer, CEO of New Constructs, an investment research firm, said the value of the crypto platform is ridiculously high. “Although Coinbase’s revenue has risen over the past twelve months, the company has little or no chance of meeting future profit expectations built into the ridiculously high expected valuation of $ 100 billion,” he says.
“The expected valuation of Coinbase of $ 100 billion implies that its revenue will be 1.5 times more than the 2020 revenue of two of the most established exchanges on the market, Nasdaq Inc. (NDAQ) and Intercontinental Exchange (ICE), the parent company of New York. Stock market, ”he said.
Coach said Coinbase’s valuation should be closer to $ 18.9 billion based on its calculation – a 81% decrease from the expected $ 100 billion valuation.
“Not for the faint of heart”
MoffettNathanson analyst Lisa Ellis explained to MarketWatch why the offer is, as she describes it “not for a faint heart”, but why she started covering the stock market with a purchase price of $ 600, even before it was the first time. trading on the Nasdaq.
“I’m super super bullish on Coinbase … because you feel like they’re a market leader in space and a crypto-agnostic,” she said.
That said, she acknowledges that currently 90% of Coinbase’s revenue comes directly from retail, with most in the US and trading primarily focused on the two largest cryptocurrencies: bitcoin and Ether ETHUSD,
on the ethereum blockchain.
“The implications are therefore that Coinbase’s revenue is correlated with the level of activity in Cryto currency and especially bitcoin and ether.”
Ellis says investors should have at least one long-term investment strategy in bitcoin, which may still go to zero by some clumsy accounts, but a three-year outlook is even better because the crypto complex tends to work. three-year cycles of tree and then bust.
Validation for crypto or a top?
Some bulls see Coinbase as validation for the burgeoning crpyto industry.
Alex Mashinsky, head of the crypto-lending and trading platform Celsius Network, put it this way:
“We view the Coinbase list as an additional validation of the space, and an important PR opportunity for the entire industry to shine as the future of finance,” he emailed MarketWatch.
‘Coinbase has more users and more revenue than many of the biggest Wall Street players and is more profitable than any major exchange, and this ratification puts most skeptics at a crossroads to evaluate their denial and frustration over the disruption of the disruption. all sides. ”
Others suggest it could be a new top for the market and put crypto prices under pressure after a huge rally in recent days and a new record for bitcoin.
Yves Lamoureux, president of the macroeconomic research firm Lamoureux & Co. in Montreal, told MarketWatch that he fears too much euphoria surrounds bitcoin and crypto and views it as a result of a retrenchment. “Can you see someone with a clumsy point of view?” he asked. “A resounding no,” Lamoureux said.
Is Coinbase the largest crypto exchange?
Coinbase is the second largest crypto platform, but the largest in the US, by volume. The title of the largest goes to Binance, which according to CoinMarketCap.com covers $ 47 billion in crypto-trading volume over a 24-hour period.
Who still owns Coinbase?
The venture capital firm Andreessen Horowitz, is the largest owner of Coinbase, with approximately 25% of Class A shares and 14 %% of Class B. And Marc Andreessen, head of the venture capital equipment, sits on Coinbase’s board.
Other facts
For those who want an even deeper dive into Coinbase, you can learn the 5 things MarketWatch has to say about the company.