Coinbase is now ready to become the first cryptocurrency exchange to launch its shares into the open market as the company confirmed a date for its direct listing in the American stock market.
According to a press release published by the firm yesterday, Coinbase’s shares will start to trade in the Nasdaq Global Select Market under the ticker symbol “COIN” on 14 April this year upon receiving the green light from the Securities and Exchange Commission (SEC).
The news comes only 12 days after the company decided to unexpectedly delay its initial offering, reportedly to avoid being swept into the turmoil seen in the stock market lately amid a spike in US Treasury yields.
Meanwhile, other reports had indicated that the company decided to postpone the launch of is shares as it preferred to shook off the bad PR resulting from a $6.5 million fine imposed by the Commodity Futures Trading Commission (CFTC) based on allegations of “self-trading” activity of Bitcoin (BTC) futures.
A direct listing for Coinbase means that there will be no institutional support for the share offering as those who hold the company’s stock at the moment can essentially sell their holdings at whatever price they see fit.
However, the Nasdaq exchange will use data from the company’s latest funding round as a reference to provide a market price once the shares hit the trading floor.
Is Coinbase an interesting stock to buy?
Coinbase’s S-1 filing with the SEC reveals multiple useful information about the company and its growth prospects.
During 2020, the company managed to more than double its total revenues compared to the previous year, moving from $533.7 million to $1.28 billion as the cryptocurrency market boomed during the pandemic.
This situation allowed Coinbase to generate positive net income of $322 million, resulting in a $350 million improvement in its bottom-line compared to 2019’s mild loss of $30 million.
Meanwhile, the company has around 43 million retail customers – which possibly makes it the largest broker by number of customers in the world – along with 7,000 institutions. Moreover, the firm currently holds more than $90 billion in assets for customers while it handled $193 billion in trading volumes during 2020.
Data from the past 3 years indicate that Coinbase has grown its platform from 23 million to 43 million users while the number of monthly transacting users (MTU) has climbed back to 2.8 million after dropping to as little as 800,000 during the first quarter of 2019.
One of the reasons why Coinbase’s valuation is so high is that the cryptocurrency market has grown exponentially, with the market capitalization of crypto assets roughly tripling from $271 billion in Q1 2018 to $782 billion by the end of 2020.
Most of Coinbase’s value will depend on the continuation of this uptrend as a sharp pullback in the value of crypto assets could result in a strong downtick in transaction-based revenues.
Since the future of cryptocurrencies is quite a heated debate, investors must analyze their beliefs in regards to the stage at which cryptocurrencies are in their economic cycle to possibly determine if this is a good time to invest in Coinbase or not.
At $68 billion the firm would be valued at nearly 53 times its sales and more than 210 its 2020 net income.