Coinbase is the talk of Wall Street, as the largest cryptocurrency platform in the US is preparing for its public debut in a traditional exchange on Wednesday, through a direct listing.
There is no doubt that Coinbase’s public offering is a big problem in the crypto world. The company was created just over a decade ago with the genesis of bitcoin BTCUSD,
and it is now in the midst of a time that many in the industry have described as a high point.
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There are several ways to get direct ownership of cryptocurrencies, in addition to buying them directly, a service that Coinbase offers for a fee and what investors seem to be paid.
Coinbase, whose users are mainly bitcoin and ethereum, reported last week that its revenue rose 847% in the first quarter to $ 1.8 billion and now has 56 million verified users.
Leeor Shimron, an analyst at FundStrat Global Advisors, described the Coinbase list as seminal. “Coinbase’s direct listing is an important moment for the crypto industry.”
Wedbush analyst Dan Ives said the listing is a reflection of the mainstream evolution of crypto.
“Coinbase is a key piece of the cryptographic ecosystem and is a barometer for the general growing adoption of Bitcoin and crypto for years to come in our opinion,” he wrote in a research note on Tuesday.
Some warn that the default valuations for Coinbase as a cryptocurrency exchange are too high compared to traditional stock exchanges such as Nasdaq Inc. NDAQ,
where Coinbase will also directly list the Intercontinental Exchange ICE,
the parent company of the New York Stock Exchange.
In a direct listing, a company floats its shares on a stock exchange, but without hiring banks to subscribe to the transaction, as in an IPO.
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, director of Coinbase, also helped create the company.
According to Forbes, Armstrong’s networth is currently $ 6.5 billion based on his ownership of the company, and his fortune will likely increase if direct listing disappears successfully.
When will Coinbase go public?
Coinbase will appear on April 14. The exact timing of the list is unclear, however Palantir Technologies Inc.PLTR,
direct listing in September the first transaction took place after 13:30, Eastern time.
Where do you list them?
Coinbase will be published on the Nasdaq under the symbol “COIN” as a direct listing, which means that it does not raise new money, as a company would do in a traditional IPO.
Coinbase is Nasdaq’s first major direct list with Spotify SPOT,
Slack Technologies WORK,
and the latest Palantir Technologies PLTR,
all choosing to list directly on the NYSE.
Ratings?
Nasdaq on Wednesday night gave Coinbase a benchmark price of $ 250 per share, valued at more than $ 65 billion.
Some bulls project a valuation of $ 100 billion or better, which would make it higher than a number of US 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. “Even though Coinbase’s revenue has grown over the past 12 months, the company has little chance of meeting future profit expectations, which are part of the ridiculously high valuation expected of $ 100 billion,” he said.
“Coinbase’s expected valuation of $ 100 billion implies that its revenues will be 1.5 times the combined revenues of 2020 for two of the most established stock exchanges on the market, Nasdaq Inc. (NDAQ) and the Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, ”he said.
Trainer said that based on his calculation, the Coinbase valuation should be closer to $ 18.9 billion – a decrease of 81% from the expected valuation of $ 100 billion.
“Not for the faint of heart”
Moffett Nathanson analyst Lisa Ellis explained to MarketWatch why the offer is, as she describes it “not for the faint of heart,” but why she initiated stock market coverage on a $ 600 target purchase just before to see his first trade on the Nasdaq.
“I’m super-optimistic about Coinbase … because you feel like I’m a market leader in space and crypto-agnostic,” she said.
That being said, she acknowledges that 90% of Coinbase’s revenue currently comes directly from retail trading, with the majority in the US and trading focusing primarily on the two largest cryptocurrencies: bitcoin and Ether ETHUSD,
on the ethereum blockchain.
“So the implications are that Coinbase’s revenue is correlated with the level of activity in cryptocurrency and especially in bitcoin and ether.”
Ellis says investors should have at least one year of a long-term investment strategy in bitcoin, which could still go to zero with some declining accounts, but a three-year outlook is even better because the cryptocurrency complex has tended to operate in three-year boom cycles and then bust.
Validation for crypto or a top?
Some bulls see Coinbase as a validation for the national crypto industry.
Alex Mashinsky, head of the crypto-credit and trading platform Celsius Network, said:
“We see Coinbase’s listing as an additional space validation and a major PR opportunity for the entire industry to shine as the future of finance,” he told MarketWatch via email.
“Coinbase has more users and more revenue than many of the biggest players on Wall Street and is more profitable than any major exchange, and this validation puts most skeptics at a crossroads, having to reevaluate their denial and frustration with the disturbance that comes from them. all parties. ”
Others suggest that it could prove to be a new top for the market and will put cryptocurrency prices under pressure after a rally in recent days and a new record for bitcoin.
Yves Lamoureux, president of Montreal-based macroeconomic research firm Lamoureux & Co., told MarketWatch that he fears too much euphoria surrounds bitcoin and crypto and therefore believes a cut is due. “Can you find someone with a bearish point of view?” he asked. “Not a resounding no,” Lamoureux said.
Is Coinbase the largest crypto exchange?
Coinbase is the second largest cryptocurrency platform, but the largest in the US in terms of volume. The biggest title goes to Binance, which sees $ 47 billion in cryptocurrency trading volume over a 24-hour period, according to CoinMarketCap.com.
Who else owns Coinbase?
Venture capital firm Andreessen Horowitz is the largest owner of Coinbase, with approximately 25% of Class A and 14 %% of Class B shares. Marc Andreessen, head of venture capital equipment, is also on the board of directors of Coinbase. Coinbase.
Other facts
For those who want an even deeper dive into Coinbase, check out the 5 things MarketWatch needs to know about the company.