Coinbase Global (COIN) shares traded higher on Thursday morning after a volatile first day on the public markets.
Shares rose about 4% to $ 341.47 per share from 9:41 AM ET. A day earlier, Coinbase shares closed at $ 328.28, up 14% from a $ 381 opening price. Shares reached $ 429.54 in the minutes immediately following the opening of Coinbase during the Wednesday afternoon session.
Based on the closing price of Coinbase on Wednesday, the company ordered a fully diluted valuation of about $ 86 billion after its direct listing. This has given Coinbase, the largest cryptocurrency exchange in the US, greater market capitalization than other major legacy exchanges, including the Intercontinental Exchange (ICE), CME Group (CME) and the Nasdaq (NDAQ). At the session highs on Wednesday, Coinbase’s valuation exceeded $ 112 billion, close to the market capitalization of Goldman Sachs (GS).
“It may be the right stock, but now it’s just the wrong price, hence the volatility,” David Nelson, chief strategist at Belpointe Asset Management, told Yahoo Finance.
Coinbase stocks are one of the few ways stock traders can invest in bitcoin, Nelson said. There are other stocks that can do that. I told clients – both institutional and retail – if you want to play crypto, go out and buy crypto assets. ‘
Inequality in shares Coinbase has also switched to bitcoin (BTC-USD). The largest cryptocurrency by market capitalization fell by about 2% on Thursday morning to trade around $ 63,000, retreating from the record high of more than $ 64,800, which was reached just a day earlier. However, Ethereum (ETH-USD) jumped to a record high, rising more than 3% to a high of $ 2,400.
But the recent volatility, except that many strategists claim that Coinbase’s public debut was a watershed moment for cryptocurrency, reflecting the peak of months of accelerated institutional adoption. Companies, including Tesla (TSLA), Square (SQ), BNY Mellon (BNY) and PayPal (PYPL), have either added significant holdings of bitcoin to their balance sheets or started facilitating transactions in cryptocurrencies, and also the old banks Morgan Stanley (MS) and Goldman. Sachs (GS) recently announced that it will begin offering bitcoin exposure to its wealth management clients. And while the U.S. Securities and Exchange Commission has not yet approved exchange-traded funds that directly own bitcoin or other cryptocurrencies, many believe a change in stance is imminent.
“This is the beginning of what I see as the new financial system. Coinbase is here the leader in building this new financial system. It is clear that it has developed to a point where there can be no stopping it,” he said. has Ross Gerber, president and CEO of Gerber Kawasaki Wealth. and investment management, told Yahoo Finance. ‘This is just an important moment for the crypto-enterprise and the industry, and finance in general, as a whole new set of leaders.
With greater interest, however, also comes the threat of competition. Coinbase earns the vast majority of its money through transaction fees through trading on its platform by retail and institutional users, and relies heavily on retail.
“Everyone is going to get Coinbase down,” added Gerber, whose company has a partnership with Coinbase rival Gemini. “Ninety percent of their revenue comes from the retailer who pays more than 2% in commissions. It’s an absurd amount. But it’s an unregulated market without competition.”
‘It is possible [Coinbase’s] margins are currently high at all times compared to what is going to happen in the coming years as real competitors like Gemini and Bittrex and Binance suppress their costs.
Coinbase’s revenue for the year ended December 31st has more than doubled to $ 1.3 billion. In the end, Coinbase increased to a profit of $ 322.3 million for the full year 2020, compared to a net loss of $ 30.4 million in 2019. Coinbase estimated for the first quarter of fiscal 2021 that it ‘ would generate a net income of between $ 730 million and $ 800. million, compared to the net income of just $ 32.26 million in the first three months of 2020.
–
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more about Emily: