Wall Street will focus on Coinbase on Wednesday, with the digital currency exchange becoming a publicly traded company.
Coinbase makes its initial public offering of shares with cryptocurrency talks seemingly everywhere, even at the US Federal Reserve. It is integrated into business plans and accepted by major companies like Tesla, PayPal, and Visa.
“Coinbase’s IPO is potentially a watershed event for the crypto industry and will be something Street will laser focus on to gauge investor appetite,” Wedbush analyst Daniel Ives wrote this week.
There were 43 million verified users of Coinbase in 2020, with 2.8 million monthly transactions. Its revenue more than doubled to $ 1.14 billion last year, and the company made a profit of $ 322.3 million after losing tens of millions in 2019.
When Coinbase filed documents with U.S. regulators in February to make them public, it said it would do so through direct listing, which allows insiders and early investors to convert their stakes in the company into shares listed on the stock exchange.
Coinbase’s shares, which will be traded on the Nasdaq under the symbol “COIN,” will 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,” explains Demmissie.
Some Wall Street analysts predict that Coinbase Global Inc. could be valued at $ 100 billion, based on private transactions of its shares. This week, the Nasdaq gave the company a benchmark price of $ 250.
That would make it one of the top 100 US publicly traded companies that will be much bigger than the New York Stock Exchange or the Nasdaq.
The Coinbase hype gathered pace last week when the company released estimates of its first quarter results, including around $ 1.8 billion in revenue and net profit of between $ 730 million and $ 800 million.
However, not everyone is convinced. David Trainer, CEO of investment research firm New Constructs, said Coinbase has “little or no chance of meeting the expectations of future earnings that are built into its ridiculously high valuation.”
Last week, the trainer valued Coinbase at nearly $ 18.9 billion, saying it will face increased competition as the cryptocurrency market matures.
However, Ives from Wedbush sees Coinbase as a window to the future.
“Coinbase is a fundamental part of the crypto ecosystem and is a barometer of the growing adoption of Bitcoin and crypto by the general public for years to come,” Ives said.
– Michelle Chapman and Alex Veiga