The most eagerly awaited stock market event of the year took place last night: Coinbase has finally been floated on the Nasdaq! The world’s second-largest cryptocurrency exchange, and leader on the US market, is the very first cryptocurrency-related company to have gone public. Wall Street had its eyes on this UFO of the US stock market all day.
Coinbase chose a direct listing for its IPO this morning under the ticker symbol COIN. Nasdaq, the second-largest stock market index in the United States after the New York Stock Exchange, has set its reference price at $250 a share. We do not yet know what the actual price will be.
A sensational IPO for Coinbase
This IPO was the most eagerly awaited event of 2021. The economic and financial media had been talking about it for weeks, and trading enthusiasts followed the event closely this morning.
This excitement is due to the fact that Coinbase is the very first cryptocurrency-related company to go public! The authorisation that the SEC, the Securities and Exchange Commission, gave Coinbase to go public had surprised and caused a lot of ink to flow. Specialists and the crypto-community saw it as the first sign of acceptance of virtual currencies. Indeed, crypto-currencies, which until now have been viewed with immense suspicion, have officially set foot on the traditional financial market today. And the latest estimates predicted an IPO surpassing that of Facebook, which has also been listed on the Nasdaq since 2012.
Coinbase is no match for traditional institutions
Coinbase’s IPO was led by Goldman Sachs. Founded in the 19th century, Goldman Sachs remains Wall Street’s most prestigious institution, giving Coinbase’s IPO some credibility in the eyes of the most sceptical.
But on closer inspection, the young platform has little to envy from traditional institutions! Coinbase is already worth $100 billion, barely less than Goldman Sachs, which is worth $120 billion.
100 billion is also more than our own BNP, the first bank in the eurozone, founded in 1848, which is currently worth just 80 billion dollars. In less than ten years and with just 1,250 employees, Coinbase has risen to the level of the world’s largest banking institutions.
Introducing Coinbase, the US market leader
Coinbase is a cryptocurrency exchange based in San Francisco. It was founded in 2012 by Brian Armstrong and Fred Ehrsam. Coinbase enables users to buy, sell, store and save crypto-currencies. It is second on the global market after Binance, but the leader in the US market. Coinbase began by offering to buy and sell Bitcoins. Today, the platform offers its customers more than 4,000 cryptos, enough to vary their digital asset portfolios. The most popular cryptocurrencies on the market are available: Bitcoin, Bitcoin cash, Litecoin, Ethereum, Ethereum classic, Dogecoin, etc. Coinbase accepts several payment methods, its service charges are in line with the market average and the platform is one of the most secure. It’s easy and secure to make investments.
Coinbase posted exceptional sales figures at the start of the year. In fact, the platform earned more in the first quarter of 2021 than it did in the whole of 2020. Its sales have grown steadily over the last four years:
520 million in 2018
534 million in 2019
1.3 billion in 2020
1.8 billion for the first quarter of 2021
Coinbase’s sales for 2021 are therefore estimated at $7.2 billion for the time being, based on this quarterly figure. These results are largely due to the bull run in Bitcoin, which reached a new all-time high when it topped $62,000 yesterday. The other cryptocurrencies, which are following it in this upward trend, are also contributing to the increase in Coinbase’s turnover, as Coinbase takes a percentage of the value of transactions carried out on its platform.
Coinbase direct quotation
Coinbase has opted for a direct listing on the Nasdaq stock exchange under the ticker symbol COIN. This index specialises in IT and Internet companies. By opting for a direct listing, Coinbase’s historical shareholders (its employees and management) have decided to sell some of their shares. No new shares will therefore be placed on the market.
For the time being, Coinbase has announced that it is offering 130.7 million shares on the market. Nasdaq has set its reference price at $250 per share. However, this price is purely indicative, as Coinbase has opted for a direct listing. Its real price will only be set when it is first listed, based on supply and demand.
The company’s valuation is estimated to reach $65.3 billion if all outstanding shares, stock options and restricted shares are taken into account. Last we heard, Coinbase was to be valued at $116 billion, which some experts thought was extremely high given that the company’s 2020 sales figure was just $1.3 billion.
What do we think of the Coinbase revolution and COIN?
Experts see Coinbase’s breakthrough as the first step towards the general democratisation of cryptocurrencies. But even though the SEC has authorised Coinbase’s IPO and it is indeed a major step forward in the recognition of cryptocurrencies, it is still far too early to claim victory. The most optimistic should therefore be wary of seeing this as a loss of power by governments over currencies, at least in the long term. Indeed, it is unlikely that governments will so easily leave the field open to cryptocurrencies, most of which advocate an ideal of decentralisation. The democratisation of cryptocurrencies will therefore necessarily lead to government measures in the various countries to try to control them. The price of the various cryptocurrencies, and by extension Coinbase’s share price, are likely to fall as a result.
Nevertheless, COIN remains a very interesting stock to watch closely. From tomorrow, you will be able to buy Coinbase shares in post-IPO on trading platforms. Coinbase also appears to be paving the way for other crypto companies. Its rival Kraken has announced that it too intends to carry out an IPO in 2022. Stay tuned!
