Cryptocurrencies have become mainstream. Photo / AP

Coinbase made an enthusiastic debut on Wall Street on Wednesday, with the digital exchange rate hitting US $ 429, briefly giving it a market value of over US $ 100 billion (NZ $ 139 billion).

Coinbase Global’s initial public offering comes with cryptocurrency chatter seemingly everywhere, even at the US Federal Reserve. Digital currencies are built into business plans and accepted by big companies like Tesla, PayPal, and Visa.

The San Francisco-based company’s listing on a public exchange is seen by some as an inflection point for digital currencies, as Coinbase’s fortunes are closely tied to Bitcoin, the most popular cryptocurrency. The price of Bitcoin topped $ 63,000, up from $ 29,000 at the start of the year, and Coinbase recently said that first-quarter revenue is expected to total around $ 1.8 billion, beating its revenue for all of 2020.

Coinbase shares are listed on the Nasdaq under the symbol “COIN” and were trading around US $ 376 after about 40 minutes of trading, representing a market value of around US $ 98.2 billion.

This market value makes Coinbase one of the largest publicly traded US companies – only 83 companies in the S&P 500 Index have market values ​​above $ 100 billion. The value of Coinbase is greater than the combined market value of the Nasdaq, which operates the Nasdaq Stock Market, and the Intercontinental Exchange, which owns the New York Stock Exchange.

Founded in 2012, Coinbase has become popular among cryptocurrency fans by providing them with an easier way to trade shares of Bitcoin and other digital currencies.

Coinbase said it had 56 million verified users as of March 31, of which 6.1 million transact per month. The first quarter trading volume was $ 335 million.

Coinbase earns 0.5% of the value of every transaction that goes through its system. So if someone buys $ 100 in Bitcoin, Coinbase earns 50 cents. If the prices of Bitcoin or Etherium go down, the commissions collected by Coinbase also go down, giving it some exposure to the rise and fall of the value of the digital currency.

Instead of using a traditional IPO, Coinbase went public through a public listing. This means that he avoided the typical deals with the big banks that would buy thousands of shares and promote them. A direct listing allows insiders and early investors to convert their stakes in the company into publicly traded shares.

Other recent direct listings include music streaming service Spotify in 2018, messaging service Slack in 2019, and data mining company Palantir Technologies in 2020.

Coinbase shares are expected to attract investors who want to enter the cryptocurrency space in addition to or without purchasing coins at all, said Lule Demmissie, chairman of Ally Invest.

“It could also be a less volatile security than the coins themselves,” Demmissie says.

Yet not everyone accepts the Coinbase hype. David Trainer, CEO of investment research firm New Constructs, said Coinbase had “little or no chance of meeting future profit expectations that are baked into its ridiculously high valuation.”

Last week, the trainer valued Coinbase closer to $ 18.9 billion, saying it will face increased competition as the cryptocurrency market matures.

However, Dan Ives of Wedbush sees Coinbase as a window to the future.

“Coinbase is a fundamental part of the crypto ecosystem and is a barometer for the growing adoption of Bitcoin and crypto in the years to come,” Ives said.

– Associated press

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This notice was published: 2021-04-14 20:00:09


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