August 15, 2020

Market News

Coinbase share – all information about the planned IPO

The trading platform operator Coinbase is not just one of the most important companies in the crypto scene. Rather, Coinbase is also a unicorn. Accordingly, investors value the company at more than eight billion US dollars. As it became known on July 9, 2020, Coinbase is now planning its Initial Public Offinger (IPO). According to the media outlet Reuters , the Coinbase share could find its way to the stock exchange this year.

Krypto-Unicorn plans to go public – Coinbase stock on the approach

As three Coinbase confidants told Reuters, the startup is now planning its IPO. The crypto exchange is one of the leading providers on the US market and has seen rapid growth in recent years.

Investors are expected to experience the issue of the first shares later this year – at the latest, however, it should be ready at the beginning of the coming year. However, the report also clarifies that Coinbase has not yet had any talks with the SEC. However, these discussions are mandatory for a public listing. Nevertheless, the crypto exchange is already looking for a suitable commercial bank and law firms. However, the company avoided the direct inquiries with the reason that it did not comment on any rumors or speculations.

Does Coinbase issue the share in IPO or direct listing?

Furthermore, it is not yet clear whether the Coinbase share will be placed as part of a classic initial public offering or through a direct listing. At the IPO, a commercial bank like JPMorgan takes over the complete evaluation and placement of the company. Such an IPO is particularly expensive – as a rule, companies can expect IPO costs of several hundred million US dollars. The alternative to this is direct listing. In this case, the company takes over the placement of the shares under its own control – most recently, investors were able to observe this at the streaming provider Spotify.

Coinbase share in IPO or direct listing
Coinbase share in IPO or direct listing

Basically, it appears that a direct listing is the better way to undertake the first issue of the shares. However, there is of course a risk here that the company will incorrectly price in the value of a share certificate. If the valuation were too low, Coinbase would take up too little equity when going public. The share price would rise fairly quickly, but the company only earns from issuing on the primary market. The secondary market business, the classic share trading between market participants, does not flush any further capital into the company.

Experts see Coinbase as a candidate for direct listing

If Coinbase, on the other hand, rates the price too high, the IPO could fail – in this case too, insufficient capital flows to the company. This systematic risk also contributes to most companies opting for the expensive first placement through an investment bank. Nevertheless, we have seen a clear trend towards direct listings over the past few years. This was due to the low valuations that the banks proposed.

Overall, Coinbase can be described as the perfect company for a direct listing. After all, the story would fit a crypto company. Coinbase has previously convinced investors and raised more than $ 500 million in venture capital. It was only in the last round of financing that the company received $ 300 million, reaching an enterprise value of $ 8 billion.

Non-transparent business figures at Coinbase

However, potential investors are currently faced with a fundamental problem: nobody knows the company's exact business figures. The financial data in particular are somewhat unclear or inconsistent. However, this is basically not yet a warning sign, as this applies to numerous privately owned companies.

Different media have produced estimates – the consensus for 2017 is based on sales of around one billion US dollars. However, one has to take into account in this estimate that in 2017 there was a bull market on the crypto exchanges and every coin set new records. No further estimates are available for the following financial year. The only thing that is certain is that the media expected smaller numbers of sales for the 2018 financial year.

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What is certain, however, is that we will experience S-1 filling before the Coinbase IPO. Companies planning to go public must submit the S-1 form to the SEC. At this point at the latest, there should be more clarity regarding the Coinbase business. With the S-1 form, we can also evaluate how business has developed in recent years and what impact the bull market and the bear market have had on the financial situation.

Conclusion: Coinbase share – the tension increases

It is not surprising that Coinbase is now planning to go public. After all, most cryptocurrencies have overcome the 2018 valley. Nevertheless, there is no public information about the stock issue yet. Coinbase has also not commented on the rumors about the Coinbase share.

S-1 filling is likely to be particularly exciting for market participants. At this point at the latest, investors and investors get a concrete picture of the business development at the exchange operator. It can be expected that the business will develop positively again after 2018. As soon as we receive new information about the Coinbase IPO, we will publish an update.

In my view, the success of the Coinbase share depends on the SEC report. Should the business develop positively and convince with an attractive return expectation, then the market participants should be quite willing to value companies with a particularly high price-earnings ratio. If this happens, investors can already look forward to the official listing.