On December 17, 2020 cryptocurrency brokerage platform Coinbase announced that it has filed a draft registration statement with SEC, for plans for an initial public offering. The announcement comes as interest in cryptocurrencies has soared during the coronavirus pandemic as investors have found such currencies attractive as the US dollar and other leading currencies weaken. The Coinbase IPO would mark the first US cryptocurrency company to go public. Institutional investors also see the Coinbase IPO as a way to get exposure to cryptocurrencies.
Coinbase plans to go public by way of a direct listing on Nasdaq (instead on NYSE), on Apr 14, 2021. Some analysts are forecasting that Coinbase could debut at a $100B valuation.
Nasdaq on Apr 13, 2021 set a reference price of $250 per share for Coinbase Global Inc, projecting a value for the largest U.S. cryptocurrency exchange at $49.19 billion ahead of its landmark stock market debut on Apr 14, 2021.
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What is an IPO and how it works
IPO is a process of offering shares of a private corporation to the public in a new stock issuance. Why go public? The primary benefit of going public is easier access to capital.
To go public, a company must have a track record of growth and other favorable results and hire an investment bank to come in and underwrite the IPO. The underwriters also performed due diligence and verified financial information and business model.
Once the paperwork done, the company sells the stock to institutional investors. When the initial block of shares has been sold, the company sets an initial price and date for the stock to begin trading on a stock exchange.
Financial Indicators before Coinbase Markets Inc IPO
The company launched in 2012 founded by by Airbnb alum Brian Armstrong and Fred Ehrsam, and was valued in the end of 2020 at $8 billion. In July 2020, the company said it has 35 million users in 100 countries. Coinbase has high trading fees and company is profitable since 2017 which is rare among recent tech IPOs for the past years.
Coinbase mainly derives revenues from two sources – its operations as a crypto exchange and its custody business, which offers custodial services for cryptocurrencies to banks and institutions. Based on trading volume figures, Coinbase is US biggest cryptocurrency exchange.
Coinbase currently supports Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and 44 other popular cryptocurrencies, planning to add support for many other cryptos. The recent crypto rally increased the crypto asset popularity with both institutional and retail investors. Citibank reportedly admits Bitcoin is likely to reach $318,000, while Guggenheim Global Investment Director said the company started acquiring Bitcoin at $10,000 and wants to allow the price to reach as much as $400,000. Meanwhile, e-wallets are being more frequently used during the pandemic, which made PayPal, Square, and other provides add crypto support.
Coinbase generated $1.3bn in revenue in 2021, up from $534m the year prior, enabling the company to turn a profit of $322m in 2020 after losing $30m in 2019, according to a filing with US securities regulators.
Previous Coinbase Funding
Per Crunchbase information, Coinbase has raised $547.3 million from a row of venture capitalists, organizations and individuals, including the likes of Andreessen Horowitz and former Citibank CEO Vikram Pandit. In private markets, the company is considered a unicorn, meaning it has a valuation of more than $1 billion.
Coinbase Direct Listing Offering
Coinbase decided to go public via direct listing offering. The direct listing offering, or DPO, bypasses the usual initial public offering (IPO) process, which usually is costly. DPO saves on underwriter fees, and companies that follow the direct listing process can avoid restrictions such as lockup periods that prevent insiders from selling their shares for a defined period of time.
How to Buy Stocks Before an IPO (Offering Price)
In the past, IPOs as highly profitable investments were available only to the privileged customers of the leading brokerage firms and it was challenging for retail investors to gain access. You couldn't buy shares paying the price set by the company and you had to wait until the shares actually start trading on the public stock market at whatever stock price supply and demand allows.
Technologies and marketplaces changed the rules of the game, now regular investors can get pre-IPO shares. To participate in IPO you need to use an IPO investing app like Freedom Finance (NASDAQ: FRHC), TD Ameritrade or Fidelity. They give its customers access to IPOs and secondary offerings through their existing brokerage account. Also you can buy shares when a company goes public via a commission-free trading app like Tradernet, or eToro if you live in the US.
Instruction How to Participate in an Initial Public Offering before public trading:
Below we share the instruction how to participate in the approaching IPOs using Freedom Finance (Tradernet platform). This marketplace is chosen as an example because they have the widest selection of available initial offerings and our community fellows already participated in many IPOs via this platform and participation process is well known.
- Pros: most high-profile IPOs are available for participation via Freedom Finance, no eligibility requirements, no number of previous trades needed and low minimum investment amount for participating in an IPO.
- Cons: the user interface of the platform is a bit outdated.
* Freedom Finance services are NOT available to US citizens and residents.
- Apply for a Freedom Finance account — you need to prepare your identity document and a document confirming the address of residence (utility bill). The verification process is very fast, it will take 2 minutes to create your account.
- Deposit your account — to participate in an IPO, your account must have available funds in the amount you send IPO application for.
- Wait for a request to participate in the IPO — a few days before IPO date you will get a notification (email and SMS text message) from Freedom Finance. You will have about 48 hours to apply for the IPO.
- Submit a request to participate in the IPO — when you get a notification that you can apply to buy shares, go to IPO section of the platform > you will see the IPO listing with the share price set by the underwriter > click Participate in the IPO > input the amount you want to invest > Send your application. Note: Before the book closing, a request can be withdrawn. At the time of the book closing, 1 day before the start of the exchange trading, the specified amount will be blocked on the account.
- Wait for allocation — The actual number of stocks purchased during an IPO depends on supply and demand. The higher underwriter reserves the right to partial execution of collective applications. So if the demand is high you may get less than you applied for. Of course, you will only pay for the shares purchased. The rest of the funds will be returned to your account.
- Start of trading — With the beginning of the public trading on the stock exchange, the purchased shares will appear on the account and a lock-up period will start— a 93-day period of prohibition on sale. You can’t sell stocks, but you can track their current value and growth indicators in your personal member area and a trading terminal.
- Closing your trade — At the end of the 93 days lock-up period, you will be able to manage your stocks at your discretion — leave in the portfolio or sell and withdraw money or transfer the stocks to another depository/ broker in your name. This can be done in your account by clicking the ‘Sell’ button next to the name of the security. In this case, a commission of 0.5% of the amount of the sale transaction is charged.
List of IPOs available for participation now
When is the Coinbase IPO date
14 April, 2021
We will update when the exact Coinbase IPO date is known – if you want to get notified please subscribe for updates here.
What is Coinbase IPO price range?
We will update when the Coinbase IPO offering price is known – if you want to get notified please subscribe for updates here.
How to Invest in Coinbase after the IPO date (opening price)?
In what currency Coinbase IPO and post-IPO shares will be traded?
The Coinbase IPO and stock trading currency will be USD.
If you have funds in another currency the cheapest way to convert your currency is to use the mid-market rate (that’s the one you’ll find on Google) which can be done via a fintech service like Wise. Banks may add hidden markups to their exchange rates - charging you more without your knowledge. And if they have a fee, they charge you twice. Wise never hides fees in the exchange rate.
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What is the ticker (stock symbol)
The stock ticker for Coinbase will be COIN
Coinbase Registration Statement on Form S-1
Coinbase IPO news
- December 17, 2020 – Coinbase filed its confidential S-1 form with the SEC to go public.
- December 28, 2020 – Coinbase stops trading of XRP following SEC suit against Ripple. Now institutional investors will also see the Coinbase IPO as a safer way to get exposure to cryptocurrencies instead of direct crypto purchase.
- January 28, 2021 – Coinbase announces proposed direct listing DPO.
- February 8, 2021 – Tesla Buys $1.5 Billion in Bitcoin, sending the price of bitcoin soaring.