Cryptocurrency exchange Coinbase Global ( COIN ) was given a reference price late Tuesday of $250 a share for its direct listing on the Nasdaq in a highly anticipated initial public offering.The Coinbase IPO will commence trading Wednesday under the ticker COIN.At the reference price, Coinbase will have a valuation of $65.3 billion on a fully diluted basis.As to where the valuation will be on its first day of trading is just speculation but the high end of estimates is about $100 billion.The reference price is based on past transactions of Coinbase shares on private exchanges and input from the investment bankers.However, it does not indicate where the stock will open.
Coinbase is the largest U.S.cryptocurrency exchange.It lists about 50 cryptocurrencies for trading and is the first major crypto company to go public.The company’s value has soared in the past year as the price of bitcoin and ethereum, the primary currencies traded on the site, have soared.Bitcoin is the largest digital coin by market value, and has more than doubled in value so far this year.As a result, that helped lift the total value of the cryptocurrency market past $2 trillion, doubling in about two months amid surging institutional demand.
Bitcoin accounts for about half of that $2 trillion.IBD Newsletters Get exclusive IBD analysis and actionable news daily.IBD Newsletters Get exclusive IBD analysis and actionable news daily.Get these newsletters delivered to your inbox & more info about our products & services.Privacy Policy & Terms of Use Thank You! You will now receive IBD Newsletters Something Went Wrong! Please contact customer service Street Cred For Coinbase IPO Analysts expect the Coinbase IPO to give the cryptocurrency market increased validation.”The Coinbase IPO is potentially a watershed event for the crypto industry and will be something the Street will be laser focused on to gauge investor appetite,” Wedbush analyst Dan Ives wrote in a note to clients.
“Coinbase is a foundational piece of the crypto ecosystem and is a barometer for the growing mainstream adoption of Bitcoin and crypto for the coming years.” On Tuesday, Bitcoin’s price touched yet another a record high .Traders have lifted the Bitcoin price higher, on signs of more mainstream and institutional adoption.Morgan Stanley ( MS ) now allows some of its wealthiest clients to add Bitcoin to their portfolios.In addition, Tesla now accepts Bitcoin as payment for cars.Mastercard ( MA ) and PayPal ( PYPL ) are embracing Bitcoin as well.Also, in October, digital payments company Square ( SQ ) purchased $50 million worth of bitcoin.
PayPal stock climbed 2.4%, closing at 275.43 on the the stock market today .Square stock rose 3% to 273.10.Coinbase IPO Is A Direct Listing Coinbase is not doing a traditional IPO.It’s going public through a direct listing instead .The current owners of Coinbase stock will convert their shares to make them available for trading.Doing so lets them avoid large fees from investment bankers.The company has listed 114.9 million shares for sale directly to the public, according to the Coinbase IPO filing , though it’s not yet known exactly how many will be available for sale.The company’s expected to reveal a reference price for shares late Tuesday.
Shares will commence trading live on the Nasdaq sometime Wednesday.Direct listings are rare but have been used by big-name companies such as Spotify Technology ( SPOT ) and Palantir Technologies ( PLTR ).Analysts value Coinbase somewhere in the range of $70 billion to $90 billion, though some estimates go as high as $100 billion.
Manhattan Venture Partners values Coinbase at $98 billion.”Given the company’s strong competitive position in a growing market, and its strong financial profile, we believe the valuation is justified as it enters the public market,” Manhattan Venture Partners said in a Coinbase report .”Strategic partnerships with global financial services and online payment companies is giving much-needed validity and recognition to cryptocurrencies and increasing their use cases,” it said.In a voluntary and preliminary first quarter earnings report issued last week, the company said it verified 56 million people with Coinbase accounts.That’s up from 43 million at the end of December.First Quarter Tops All Of 2020 Further, Coinbase’s first quarter results surpassed all of 2020.The company reported revenue of $1.8 billion in the quarter, with net income of approximately $730 million to $800 million, according to the filing .
Last year, it brought in $1.3 billion in revenue with a profit of $322 million.Trading volume topped $335 billion in the quarter.
For all of 2020, trading volume was $193 billion.Total assets on Coinbase’s platform increased from $90 billion to $223 billion, a nearly 150% increase.Its full-year outlook presented a range of possibilities, “given the inherent unpredictability of our business,” the company said in its report.”To state the obvious, our business is hard to forecast,” Coinbase Chief Financial Officer Alesia Haas said after the earnings report.
She cited the inability to predict the prices of Bitcoin and other cryptocurrencies.About 96% of Coinbase’s revenue comes from transaction fees.
It has several lines of business in addition to its exchange services.Among them is Coinbase Commerce, which provides online retailers with software that lets them accept cryptocurrency payments.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.YOU MAY ALSO LIKE: Is PayPal Stock A Buy Right As Bitcoin Hits Record Highs? Bitcoin, Blockchain And Cryptocurrency News IPOs Go Supersonic In First Quarter, Smashing Records Like It’s 1999 See IBD Stock Lists & Get Pass/Fail Ratings For All Your Stocks With IBD Digital Airbnb Plans Direct Listing Approach For Its Public Debut .
