After months of waiting and uncertainty, Coinbase, the cryptocurrency exchange, finally got the green light from the US Securities and Exchange Commission (SEC) to list its shares on the Nasdaq Composite. Since filing for an IPO last December, the cryptocurrency giant has decided to make its trading debut on the stock exchange through a direct listing on April 14th.
Regulatory inquiry?
A few days ago, Coinbase announced that it was hiring Brett Redfearn, a former SEC director, to run its capital market business. Redfearn’s rent comes at a time of increasing legislators’ attention. With the exchange, the controversies in the past were also at their peak. Last week, the Commodity Futures Trading Commission fined Coinbase $ 6.5 million for accusing the CFTC of “reckless delivery”[ing] false, misleading or inaccurate reports regarding transactions in digital assets. ”
Is the valuation of Coinbase justified?
The company could raise more than $ 100 billion through its direct listing. Its astronomically high valuation is largely due to its explosive growth. Coinbase generated total revenue of $ 1.3 billion and adjusted EBITDA of $ 527.4 million in 2020 – representing annual growth of 240% and 2200% respectively. Its retail user base also grew from 13,000 to 43 million between 2012 and 2020. With the technology sector and NASDAQ components trading at an incredibly high valuation multiple, Coinbase’s valuation is quite reasonable to say the least.
In an amended S-1 submission to the SEC, Coinbase said it plans to sell 114.9 million shares through its direct public offering. Coinbase will trade under the coin COIN, and its reference price will be available the night before the listing. In terms of dividends, Coinbase stated that it would pay nothing to its ordinary shareholders, and intended to “retain all available funds and future earnings” for industry.
Featured image from UnSplash