Coinbase Stock Debuts at $381, 52% Higher Than Reference Price
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Coinbase, the San Francisco-based cryptocurrency exchanged led by Brian Armstrong, has finally gone public.
The company’s stock, $COIN, debuted on the Nasdaq on Wednesday afternoon at a price of $381, a 52% pop from its $250 reference price.
The $381 share price gives the company a valuation just a hair under $100 billion.
Crucially, today’s direct listing was not an IPO. Where an IPO involves introducing new shares, a direct listing typically sells existing equity without dilution. It makes sense for a company like Coinbase, which has been around for the better part of the past decade, and has already raised hundreds of millions in venture funding.
Thanks to that funding, early Coinbase investors like Marc Andreessen just became significantly more wealthy (Andreessen is the largest non-employee shareholder, with the most individual voting power after CEO Brian Armstrong).
The rapper Nas and his investment firm Queensbridge Venture Partners, who invested in Coinbase back in 2013, are also taking home some money today.
One of the quirks of $COIN stock is its proximity to cryptocurrencies like BTC and ETH—in Coinbase’s Form S-1, filed with the SEC earlier this year, the company said that trading volume on its platform is directly tied to the performance of the market.
In recent months, that correlation has been to the exchange’s advantage. We’re in the midst of a bull market that’s taken the price of BTC from the low $10,000s to over $62,000, and Coinbase has seen a huge influx of trades as a result.
Coinbase makes its money off transaction fees on its exchange. In Q1 of 2021 alone, Coinbase made a profit of between $730 and $800 million on $1.8 billion in revenue—that’s more than it took home in all of 2020.
If the crypto market were to stagnate—or worse, crash like it did in early 2018—that could send the price of Coinbase stock down with it. That’s part of the reason why some analysts, such as New Constructs CEO David Trainer, believe Coinbase stock is currently overvalued.
Whether the link between crypto and $COIN will ultimately pay off for shareholders is now a $100 billion question.
Editor’s note: This story is developing and will be updated.
