Recently, the IPO (Initial Public Offering) market has become interesting to a large number of completely new investors who have not even been participants in the stock market. There is one big reason - profitability. The average return after the lock-up period is 40.5%, which corresponds to 162% annual in dollars (excluding commissions and personal income tax). In this article we will discuss the key details of Coinbase IPO: the history of the company, when is Coinbase IPO date, Coinbase IPO price and everything you should know to make a decision whether to invest in it or not.
Who’s not into crypto nowadays? Brian Armstrong and Fred Ehrsam definitely knew that the future had some BTC in the name. Back in 2012 Brian, a former Airbnb engineer had an idea to make a convenient cryptocurrency exchange, because at that time buying a Bitcoin required advanced computer skills. He was later joined by Fred Ersham, a former Goldman Sachs trader, and together they raised their first money from Y Combinator. It was humble $150.000 cash injection which turned into $47 billion valuation. It took 9 years from founding until announcement of Coinbase stock IPO date. But let’s go along the route to Coinbase IPO 2021.
In 2012 they firstly introduced the services to buy and sell bitcoins through bank transfers. That was a quick success and 2013 was generous for money from institutional investors. In May 2013, the company got a $5 million Series A from Union Square Ventures. Later that year, the company received $25 million from Andreessen Horowitz, Union Square Ventures and Ribbit Capital.
With money and a lot of support from venture firms the company accelerated and got the name in the industry. In spring 2021 everyone was excited about Tesla receiving payments in Bitcoin, then Amazon said they would also introduce this feature. Little do people know that throughout 2014, Coinbase partnered with Dell, Expedia, Dish Network, and even Time Inc. allowing those firms to accept bitcoin payments. Not a pioneer in this, Musk, huh?
The company acquired several fintech startups to enhance their platform such as the blockchain explorer service Blockr, the web bookmarking company Kippt in 2014, blockchain intelligence platform Neutrino in 2018, digital asset trading firm Tagomi in 2020 and AI-powered support platform Agara in 2021. Moreover, with the development of the market it kept adding new coins: Ethereum in 2016, Bitcoin Cash in 2017 and in 2018 together with some other big crypto firms they created a digital dollar - USD Coin.
As of 2021 Coinbase exchange can offer over 30 digital currencies to its 56 million users and is the largest cryptocurrency exchange in the United States by trading volume. Of course, such scale and amount of money in crypto are not ignored by, sometimes cruel, dark net world and the exchange was attacked by hackers several times, but always unsuccessful.
Two interesting facts about Coinbase:
- It doesn't have headquarters. After the pandemic hit the world, they announced it was becoming "remote-first".
- Coinbase is a subsidiary of Coinbase Global. Such organizational restructuring was held in 2014.
The latest Bitcoin and crypto hype was in 2017-2018 and it wasn’t unusual to hear questions like ‘When is Coinbase going public?’.
But we all had to wait for Coinbase IPO date and price until 2021.
Coinbase’s Public Listing Key Data and IPO Date
IPO Date: April 14, 2021
Share price: $250
Valuation at IPO: $47 billion
CEO: Brian Armstrong
Category: EDP Stocks
Method: Direct listing
In December 2020 Coinbase filed for the IPO with the U.S. Securities Exchange Commission(SEC) and at that point of time we don’t know when is the Coinbase IPO date. Usually IPO happens 4-6 months later after filing, but Coinbase CEO said they had yet to decide the way of Coinbase going public. Let me remind you that there are 3 ways for the company to go public: traditional IPO, direct listing and via SPAC. via traditional IPO, direct listing or SPAC.
The difference between them is in the IPO process. Traditional IPO requires due diligence of the business, financial reports and S-1 form, underwriting Coinbase’s new securities, making roadshows, collecting pre-IPO applications, allocating, etc. It’s just traditional.
Direct listing, also Direct Public Offering (DPO), implies selling already existing shares, so no new shares will be created, thus, no underwriters needed. It would be the simplest way for Coinbase to become publicly traded and they went for it. Coinbase IPO date was set on April 14 but Coinbase IPO price was to be set by NASDAQ instead of doing IPO on the NYSE.
The third option is via a Special Purpose Acquisition Company (SPAC). It is a way when a public company merges with a private company and thus becomes public. It has become popular recently and was used by many well-known companies such as BarkBox, WeWork and others.
Because direct listing is less popular than other means and doesn’t require bookbuilding, the company might get less attention and some people are still asking ‘Is Coinbase publicly traded?’
Yes, on April 13 Nasdaq set the reference price of $250 per share. And the next day Coinbase stock IPO price started from $381 in the beginning of the day, peaked at $429.5 and fell to $328.
As of November 2021, Coinbase is traded with almost 30% discount to April's IPO price. Should we buy it at such a low price?
So What About Investing In It?
After Coinbase IPO in April many things have happened to the crypto market. 2020 was a wild run with Bitcoin hitting new all-time highs. We should understand that the company earns on trading volumes because it receives a fee for each transaction. If trading volumes fall - company’s profit falls too. There is too much volatility in this market: government restrictions, hacking, pumps and dumps… which inevitably leads to certain cyclicality of the business. When the market is bull - trading volumes are high, after another steep drop of Bitcoin - everyone is afraid to move.
Coinbase is also taking steps to reduce the volatility of its business to an extent, doubling down on areas such as providing blockchain infrastructure and increasing its exposure to institutional customers, who are more steady compared to retail traders.
All in all, the current price seems attractive for a long term investment if you believe in the crypto future.
Is Coinbase a public company?
Yes, the company went public on April 14, 2021 through direct listing.
How much does Coinbase worth?
For publicly traded company their worth might be estimated in market capitalization. At IPO process Coinbase stock IPO price was $250 but rose 24% the first day and hit $87 billion valuation. As of Nov 29, 2021 its current market cap is $65.25 billion.
What is Coinbase’s business?
Coinbase offers products for both retail and institutional cryptocurrency investors, such as trading platform and wallets, as well as other related cryptocurrency products.