Coinbase IPO Price Stock: Is It A Buy Right Now After Hitting An All-Time
Coinbase, the first major cryptocurrency company to list on a U.S. exchange, surged on its market debut on Wednesday, signaling investors eager for a piece of the red-hot digital currency market.
Coinbase began trading Wednesday afternoon at $381 a share, up 52 percent from the $250 reference set by the Nasdaq on Tuesday. (The reference price is set by the exchange based on expectations of where the stock will open.)
The stock fell to $310 and $429 on a volatile session that reflected the unpredictability of cryptocurrency prices. Coinbase closed the day at $328.28, valuing the company, including all outstanding shares, at $85.7 billion, more than 10 times its last valuation as a private company.
Coinbase stock price
Founded in San Francisco in 2012, Coinbase enables individuals and businesses to buy and sell a variety of digital currencies, including the most popular bitcoin and ether. The firm that charges transaction fees bounced back in a year of cryptocurrency boom as investors poured money into the asset and pushed its price to new highs.
Amid the excitement surrounding the Coinbase listing this week, bitcoin hit a record high of $64,000, doubling its price earlier this year. On Wednesday, the price fell to $61,939.
Unlike many other listed startups, Coinbase is profitable. Net income for the first three months of the year is estimated to be between $730 million and $800 million on sales of $1.8 billion. However, the company warned in its financial prospectus that its business development is closely tied to volatile cryptocurrency prices.
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Coinbase has raised more than $500 million from venture capital investors who last privately valued it at $8 billion. Major shareholders include Andreessen Horowitz, Tiger Global, and crypto-focused investment firm Paradigm.
Coinbase CEO and co-founder Brian Armstrong owns nearly 40 million shares in the company, making his stake worth about $13 billion. Over the past year, Mr. Armstrong has sparked controversy by saying that Coinbase employees should avoid political discussions. Some of the company's former black and female employees have also spoken out against unfair treatment and were labelled underpaid in a company report.
Coinbase went public through a direct listing, an unusual transaction that didn’t issue or sell new shares—they just started trading. Coinbase is the largest company to go public through a direct listing, popular among well-funded Silicon Valley startups that no longer need to raise capital from public market investors. Direct listings do not have the traditional lock-up period that prevents insiders from selling shares in the first six months after listing.
Coinbase's listing on the Nasdaq exchange provides an indirect way for traditional investors who may be interested in digital currencies but are unable or unwilling to buy directly. The company’s financial prospectus includes a glossary of cryptocurrency-specific terms, including internet slang like “hodl,” which means stick with your cryptocurrency investments even if prices drop.
As demand for cryptocurrencies has soared this year, Coinbase has struggled to keep up. Some customers whose accounts were ransacked by attackers or whose accounts were suspended said the company ignored their calls for help.