Coinbase is expected to make its public debut today on the Nasdaq stock exchange under the symbol ticker “COIN.” Ahead of the direct listing, the cryptocurrency exchange got a reference price of $250 per share from the Nasdaq, which translates into a business valuation of $65.3 billion.
The California-based cryptocurrency exchange opted to go public via direct listing instead of the traditional IPO, or initial public offering. By choosing the direct listing path, Coinbase will allow existing shareholders to sell their shares. The traditional IPO means that the company is issuing new shares that are then sold to raise cash.
“Today’s listing is a milestone, but it’s not as important as every new day in front of us. Coinbase has an ambitious mission: to increase economic freedom in the world. Everyone deserves access to financial services that can help them build a better life for themselves and their families,” CEO of the cryptocurrency brokerage company, Brian Armstrong, wrote in a blog.
Today marks an important milestone for the entire cryptocurrency ecosystem. The US-based cryptocurrency business, which allows its users to trade Bitcoin and other major digital assets, will become the first major business that will go public in the US. Should the company reach a business valuation of over $100 billion, it will immediately enter the list of 100 most valuable companies.
“It’s going to legitimize a lot of what these companies are doing. For one, it’s going to show just how big the industry is and how much it’s growing,” said Marcus Swanepoel, CEO of the cryptocurrency exchange Luno.
A reference price set by Nasdaq doesn’t indicate where the Coinbase stock will open on Wednesday. It is a result of the input the stock exchange receives from private market trades and investment bankers.
Some analysts suggest that a $250 per share reference price is very conservative. Nasdaq may have done this on purpose to set the bar low, as a high buying interest in the crypto business could potentially double the market capitalization on opening day.
The cryptocurrency market has witnessed a surge in demand for exposure to Bitcoin, Ethereum, and other digital assets. As a result, both Bitcoin and Ethereum trade at record highs.
“Reference price seems ridiculously low as Coinbase shares changed hands at $350/share in early March. So odds are high Coinbase doubles on opening day,” financial markets commentator Holger Zschaepitz wrote on Twitter.
MoffettNathanson analyst Lisa Ellis started the coverage with a positive view on COIN and a price target of $600.00 per share. The 12-month price target on Coinbase translates into a business valuation of over $156 billion.
As a brokerage company, Coinbase’s business model is heavily reliant on the high volatility in the cryptocurrency market and high demand for Bitcoin. Last week, the cryptocurrency company announced preliminary Q1 results that show a surge in business revenues of about 850% to $1.8 billion. The company earned between $730 million and $800 million, compared to “only” $32 million a year ago.
Bitcoin price broke above the $60,000 mark yesterday for the second time in a month to now trade near the $65,000 mark.
Nasdaq stock exchange set a direct listing reference price of $250 per share on the US-based cryptocurrency company Coinbase ahead of today’s stock market debut. Bitcoin price has soared higher to fresh record highs ahead of today’s event.
About the Author
Luigi Wewege is the Senior Vice President, and Head of Private Banking at Caye International Bank. Outside of the bank, he serves as an Instructor at the FinTech School which provides online training courses on the latest technological and innovation developments within the financial services industry. Luigi is also the published author of: The Digital Banking Revolution.