Coinbase employees spray champagne during the company’s initial public offering (IPO) outside the Nasdaq MarketSite in New York, USA, on Wednesday, April 14, 2021.
Michael Nagle | Bloomberg | Getty Images
Coinbase shares rose on Thursday in premarket trading, a day after the cryptocurrency exchange went public on a direct success list.
The company’s stock price rose more than 7% to about $ 352.50 at 7:30 a.m. ET. Coinbase was briefly valued at $ 100 billion at its Nasdaq debut on Wednesday, a major event for the cryptocurrency industry. The stock closed at $ 328.28 per share, valuing Coinbase at $ 85.8 billion on a fully diluted basis.
Investors are reacting to the news that the founder and CEO of Ark Invest, Cathie Wood, uploaded Coinbase shares worth about $ 245.9 million on the first trading day of the company. Wood is a long-term bitcoin bull, believing that Bitcoin and other digital tokens could eventually become part of the recommended portfolio for everyday investors.
Coinbase’s debut was hailed as a “core” moment for crypto, after years of skepticism from Wall Street giants and global regulators. However, there are concerns that digital asset volatility and regulatory uncertainty could weigh on the company’s long-term stock price – as well as fierce competition from other players such as Binance, Kraken and Gemini.
“Risk management from a regulatory and operational perspective is much better on Coinbase” compared to its competitors, Carol Alexander, a professor at the University of Sussex Business School, told CNBC’s “Squawk Box Europe” on Thursday.
“They got this solid stream of revenue from taxes and custody services. There’s no real competitor to the centralized exchanges, because Kraken, Gemini – I don’t think they’ll be next.”
Coinbase achieved revenue of $ 1.8 billion in the first quarter of 2021, a ninefold increase from the same period a year earlier, while profits rose from $ 32 million to $ 730 million. and $ 800 million. The number of monthly users making Coinbase transactions increased to 6.1 million from 2.8 million three months earlier.
Analysts at BTIG on Thursday gave Coinbase a “buy” rating and a target price of $ 500 – 50% higher than the company’s closing price on Wednesday.
“We believe that COIN, the most popular consumer-oriented cryptocurrency exchange in the US, is positioned as the main beneficiary of the increased adoption of Bitcoin and other digital assets as it continues to expand in the US and internationally,” he wrote. brokerage firm in a note to clients.
Coinbase held 11.3% of the world’s cryptocurrency assets as of March 31, and BTIG analysts said this market share was “essential” to their case for the company. If the market value of all cryptocurrencies – which currently stands at $ 2.2 billion – would continue to grow, “then the company’s growth could be huge,” they said.
Bitcoin bulls invest in several traditional investors that are heating up in the cryptographic space. Tesla made a $ 1.5 billion bet on bitcoin earlier this year, while major US banks such as Morgan Stanley and BNY Mellon are launching encryption services for their customers.
The most popular digital currency hit a record high of more than $ 64,000 before Wednesday’s launch of Coinbase, but has since slashed earnings somewhat to trade around $ 62,473. However, it managed to double its price at the beginning of the year. But while bitcoin supporters see it as a gold-like deposit, detractors say it could be one of the biggest market bubbles in history.