Coinbase is finally going public, but it’s taking an unusual route
Interest in bitcoin and the rest of the cryptocurrency industry has exploded in recent months, with the digital coins experiencing a massive moment. Bitcoin more than tripled its 2018 high a few days ago when it topped $61,000, with other players in the business experiencing notable growth as well. The bull run is far from over, with more money pouring in, as analysts and speculators expect this to last a while longer — bitcoin was trading at around $59,500 per coin at the time of this writing.
It’s not just investors making the right plays that are profiting from these massive growth periods. So are the middlemen involved in providing retail investors access to the highly coveted digital coins. Coinbase is one of the most popular crypto exchanges in the US and the world, and the company has just announced exciting plans of its own. Coinbase will finally go public on April 14th, trading on the NASDAQ under the COIN ticker. But the exchange is taking an unusual approach to going public that involves disclosing financial information for the first quarter of 2021.
Before going public, Coinbase will release its Q1 2021 earnings report on April 6th, a first for the company. The financials for the first quarter of the year and the guidance Coinbase will provide should inform investors on the expected share price on the first day of trading.
Coinbase announced a few weeks ago that it earned $322 million in 2020 on revenues of more than $1.2 billion, as part of mandatory S-1 regulatory filing ahead of the IPO. That’s a massive improvement over 2019 when Coinbase registered $30 million in losses on revenues of $522 million. The sentiment in the market represents the main difference between the two years. Despite the huge cryptocurrency selloff in early March 2020 that coincided with a massive market crash over COVID-19 fears, the cryptocurrency market rebounded in the following months, leading to significant gains by the end of the year.
As Decrypt explains, the financial disclosures for Q1 2021 will be all the more important, because that’s when bitcoin and other coins experienced major growth. This led to more interest in cryptos, more transactions, and more revenue for exchanges like Coinbase. The results would allow investors to appraise the value of Coinbase shares.
The report notes that private share transactions in late February valued Coinbase as high as $104 billion, a figure that some analysts disputed. On the other hand, Coinbase disclosed that the average price of shares sold between January 1st and March 15th was $343.58, which translates to a valuation of $68 billion. Reuters reported at the time that Coinbase stock traded at an average of $28.83 per share for a valuation of $5.3 billion in the third quarter of 2020. Should the Q1 2021 figures impress, the IPO price might shoot past that recent $343.58 average from private investors.
Aside from revealing financial results days before the IPO, Coinbase is also making another unusual move. Instead of partnering with banks to court investors who would get preferential prices, Coinbase will opt for a direct listing. Moreover, Coinbase will not issue any new shares. Instead, it will allow employees and early investors to sell their shares at market prices.