Crypto Exchange Coinbase Planning a Highly Anticipated Direct Listing

Coinbase, one of the go-to cryptocurrency exchanges for institutional and retail investors, is readying a highly anticipated initial public offering (IPO).

Rather than commence a traditional IPO, the company is using a direct listing and will trade under the ticker “COIN.” The shares will list on Nasdaq. A regulatory filing related to the listing confirms Coinbase is profitable and that 2020 revenue more than doubled from the prior year.

“According to the filing, Coinbase had net revenue of $1.14 billion in 2020, up from $483 million the previous year. The company also reported net income of $322 million for the year after posting a loss in 2019,” reports Jesse Pound. “Additionally, Coinbase reported about $136 million in other revenue, which includes direct sales of crypto assets and interest income, pushing its total revenue for the year above $1.2 billion.”

Why the Coinbase Listing Could Be Hot

Coinbase operates one of the largest digital currency exchanges. The company also launched the the Coinbase Index Fund in 2018. The fund is available only to accredited investors defined as those with an annual income of $200,000 or a net worth of $1 million or more. The minimum investment is $10,000 and the fund has an annual management fee of 2%, according to Coinbase.

Early investors include Tiger Global Management, Y Combinator Continuity, Wellington Management, Andreessen Horowitz, and Polychain, among others.

Predictably, price action in Bitcoin and other digital assets will play a role in the performance of Coinbase stock.

“Our net revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected,” according to the company’s regulatory filing.

The direct listing decision “comes amid a boom in cryptocurrencies broadly, with bitcoin in particular gaining more acceptance among mainstream companies and investors. Large companies including Square and Tesla have been buying bitcoin in recent months,” according to CNBC.

Coinbase’s customer base was once dominated by retail investors, but it’s shifting heavily toward institutional investors as those market participants move swiftly into Bitcoin arena.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.