The Coinbase stock debuted today, 51% higher than the reference price set at $381 as the exchange led by Brian Armstrong, finally went public so let’s read more in today’s Coinbase stock news.
The Coinbase Stock $COIN, debuted on Nasdaq moments ago at a price of $381 which is 51% higher than the reference set at $250. The $381 share price gives the company a valuation under $100 billion but it’s more important to know that today’s direct listing, wasn’t an IPO.
Where an IPO involves new shares, a direct listing sells the existing equity without dilution. This makes sense for a company like a crypto exchange especially coinbase as it has been around for more than ten years and raised hundreds of millions in venture funding. Thanks to the funding, the early Coinbase investors like Marc Andreessen became much more wealthy as he has most individual voting power after Brian Armstrong.
Rapper Nas and his company Queensbridge Venture Partners also invested in COinbase back in 2013 so they took some money today as well. One of the quirks of the Coinbase stock is its proximity to crypto-assets like Bitcoin and Ethereum as we can see in the Form S-1 filed with the SEC. the company mentioned that the trading volume on its platform is tied directly to the performance of the market. In the past few months, the correlation was to the exchange’s advantage because we are in the middle of a bull market that took Bitcoin from $10K to $60K and Coinbase saw a huge influx of trades as a result.
Coinbase made is money off transaction fees on the exchange since, in Q1 alone, the exchange made a profit of $800 million and $1.8 billion in revenue which is more than all of 2020. If the market is to stagnate or crash as it did back in 2018, it could send the price of the Coinbase stock down with it. This is one of the reasons why some analysts like David Trainer from New Constructs, believe that Coinbase’s stock is overvalued at the moment. Whether the link between the crypto world and the stocks will pay off for the shareholders, remains to be seen.
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