Instead, by using a direct listing, Coinbase will not be issuing new shares, but providing a vehicle for employees and early investors to sell their shares at a price determined by the market.
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In the case of Coinbase, the company is not pursuing a conventional initial public offering (IPO), which entails working with Wall Street banks to line up deep-pocketed investors who get the first crack at buying new shares, typically for a significant discount. All of this has led the overall stock market to hit record highs-though public offerings in the last week suggest the recent momentum is losing steam. In the last six months, numerous companies have seen their shares soar over 100% on the first day of trading, while there has also been a stampede to invest in SPACs (special-purpose acquisition companies), which are “blank check” public funds whose sole purpose is to acquire another company. It’s unclear, for instance, how public markets might react to the arrival of another so-called “ crypto winter” like the one in February 2018, when the price of Bitcoin fell by 65% and other cryptocurrencies tanked along with it.Ĭoinbase’s decision to go public also coincides with an unusually frothy period in the broader public markets. Given the massive crypto bull run that has been underway since December, it’s likely the company’s Q1 will be the best quarter to date for the company, which earns the vast majority of its revenue from trading commissions.
The impending earnings announcement will mark the first time Coinbase has publicly disclosed results for a particular quarter. Those results showed the company earned a profit of $322 million in 2020 on revenues of more than $1.2 billion-a major jump over 2019, when Coinbase lost $30 million on revenues of $522 million. The announcement comes weeks after Coinbase published its 2020 financial results as part of a mandatory S-1 regulatory filing ahead of going public. The plan is unusual, and significant because the results will arrive just days before the company offers its shares to the public, and will thus add new guidance for investors looking to determine how much Coinbase shares should be worth. The company also disclosed it will share its Q1 financial results beforehand, on April 6. Coinbase, the largest cryptocurrency in the United States, has set its Nasdaq direct listing date on April 14.
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