TL;DR
- Coinbase is the largest cryptocurrency exchange in the United States, with over 30 digital currencies and 56 million users.
- Coinbase raised approximately $547 million in total funding across seven rounds.
- The company plans to go public in 2021, joining other notable companies having their IPO this year, such as Barkbox and Hims
- Coinbase will sell their shares through a direct listing, which allows current investors and employees to sell their shares directly to the public market, without the help of an investment bank.
- Many investors believe the Coinbase IPO will serve to legitimize the cryptocurrency market.
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A quick company history of Coinbase
Coinbase is a cryptocurrency exchange that was founded in San Francisco, California in 2012 by Brian Armstrong, a former Airbnb engineer, and Fred Ehrsam, a former Goldman Sachs trader. The online platform allows all consumers and traders to exchange more than 30 digital currencies, making it the largest cryptocurrency exchange in the United States. In addition, Coinbase offers its own cryptocurrency (USD Coin) and a cryptocurrency payment platform that businesses can utilize. The company’s mission is to create an open financial system for the world. Today, the exchange has over 56 million users in more than 100 countries. 5 million users were added in the 12 months ending July of 2020.
Coinbase fundraising
Coinbase has raised about $547 million in total funding across seven rounds. Top investors include Y Combinator, Tiger Global Management, Union Square Ventures, DFJ Growth, Battery Ventures, and Andreessen Horowitz.
In 2018 Coinbase was valued at $8 billion after it raised $300 million during its series E funding round. However, analysts speculate that Coinbase’s post-IPO valuation could be as high as $70 billion.
Path to the Coinbase IPO
In mid-December, Coinbase announced the filing of an S-1 initial public offering with the SEC (Securities and Exchange Commission). However, Coinbase decided to sell shares privately ahead of the IPO on Nasdaq’s private market. This is often done to get an idea of what the public will pay for shares, before going public.
Coinbase recently announced that they will sell their shares through a direct listing. A direct listing is different from a traditional IPO. While a traditional IPO involves the issuance of new shares to the public by way of underwriters, a direct listing allows current investors and employees to sell their shares directly to the public, without the support of an investment bank. Direct listings are attractive to companies that are looking to avoid hefty banking fees that are often associated with a traditional IPO.
When is the Coinbase IPO date?
Coinbase’s IPO is expected to be listed on the Nasdaq Exchange under the ticker COIN on April 14, 2021.
What investors should know
Coinbase will be the first major U.S. cryptocurrency exchange to go public, and will therefore signify the joining of the cryptocurrency and traditional investing world. Cryptocurrency has been looked at with skepticism in the investing world, so many investors believe that the Coinbase IPO may aid in legitimizing cryptocurrency. Given that it is the first cryptocurrency exchange to go public, Coinbase will inform the value of private cryptocurrency companies.
As mentioned, analysts predict that the post-IPO value of Coinbase could reach a $70 billion valuation. According to Frank Chaparro, a crypto reporter for The Block, shares on the private market have been selling for about $200. This price may be indicative of what Coinbase will trade at in the public market.
Related: How to diversify a stock market portfolio
Bottom line
The Coinbase IPO is expected to happen in late February or early March and filing through a direct listing will allow investors and current employees of Coinbase to sell shares directly to the public market. While there isn’t a lot of information available on Coinbase, it is clear that all eyes will be on the cryptocurrency giant during its IPO. Coinbase will indicate the value of other private cryptocurrency companies and add legitimacy to the cryptocurrency market.