Crypto Comes to Wall Street!

Coinbase brings cryptocurrency to Wall Street in Landmark Stock Market Listing

Wall Street is now buzzing as the biggest US crypto platform is setting up for its debut on a traditional exchange last Wednesday. As Bitcoin and other cryptocurrencies are rising to record levels ahead of the direct offering there has been a varied speculation about the listing price.

On Tuesday night, Nasdaq set a reference price for the company at around $250 per share, it means that the company can be valued at around $49.19 billion USD. Should the Coinbase hit the public market around its latest private market valuation of $100 billion, taking into account a fully diluted share count, it will instantly be one of the 85 most valuable US companies. Around 115 million Coinbase shares will be put on the market to start.

“The opening public price will be determined based on buy and sell orders in the opening auction on Nasdaq.”

Nasdaq

The Varying Expectations of The Listing

Investors are expecting that valuations can top $100 billion, since the company has just published a set of preliminary Q1 2021 results, with revenue jumping by 9x year-over-year. In an implied valuation last Tuesday by FTX exchange, Coinbase has been valued at around $150 billion USD.

Coinbase will be valued even more than Nasdaq, which has a market cap of $25.9 billion and possibly the intercontinental Exchange valued at over $66.9 billion.

“They make more money than any publicly listed exchange in the world. They’ll make more money than Nasdaq… Coinbase is also not the most profitable crypto exchange in the world.”

Tom Lee, FOUNDER of Fundstrat

There are some positive and negative outlooks at the valuation of Coinbase, Stock research firm New Constructs has stated that it should be valued at $18.9 billion USD, since “the company has little-to-no-chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion.”

Meanwhile, Susquehanna, a research and trading firm that was considerably more optimistic stating that a fair valuation will be between $96 and $108 billion USD, because of the company’s high growth.

Can Coinbase Be Profitable?

This can be a pivotal moment for the crypto currency industry, but investors need to feel the need to practice caution, since the company has a dependence on the price of virtual currencies, which ten to be volatile. That is why the implication is that Coinbase’s revenue is correlated with the level of activity in cryptocurrency and particularly Bitcoin and Ethereum. If the price or volume declines, their business, operating results, and financial condition could be affected.

The success of Coinbase and cryptocurrencies seems to have inspired the competitors too. The head of the California-based cryptocurrency exchange platform Kraken stated last week that he hopes to take his company public next year, through a direct listing – probably resulting in more options for investing in digital asset exchanges.

“The listing is significant in that it marks the growth of the industry and its acceptance into mainstream business.”

William Cong, an associate professor of finance at Cornell University’s SC Johnson College of Business

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