Coinbase Pushes Its Market Debut to April
One of the largest U.S. cryptocurrency exchange platforms, Coinbase, was planning for a direct listing in March, but it appears that the company will be pushing its market debut to April instead.
As of right now, the Securities and Exchange Commission (SEC) is in the process of reviewing the San Francisco-based company and its plans for a direct listing. Coinbase announced back in January that it had plans to go public on the Nasdaq under the ticker symbol “COIN.” And last week, it registered for as many as 114.9 million shares to be traded. This expected direct listing could put the company near a $100 billion valuation.
The company was founded back in 2012 and has quickly become one of the better-known exchanges for trading Bitcoin, Ethereum, and other nonfiat currencies that aren’t tied to a specific currency by a specific country’s government like the U.S. dollar.
All of this news about a delayed direct listing could have been brought on by some other news involving the company. Last week, Coinbase was fined $6.5 million by the Commodity Futures Trading Commission (CFTC) for its earlier cryptocurrency trading practices in which the company allegedly provided misleading information about its trading volumes. However, the commission wanted to stress the point that Coinbase wasn’t accused of doing anything wrong and that it was more careless than intentional. CFTC Commissioner Dawn Stump stressed in her statement that the activity took place several years ago and the employee in question also left years before the fine. The orders in question were made between January 2015 and September 2018, the commission said.
Commissioner Stump explained further:
Let me be very clear: I do not condone the conduct that the commission finds Coinbase and its former Employee A to have engaged in. My point in writing is not to defend Coinbase. Rather, it is to voice my concern about the implications of today’s action for the trading public, the American taxpayer, and the commission’s priorities.
Coinbase had agreed to the order in a settlement, which doesn’t mean the company admits or denies wrongdoing. This a hefty fee to agree to, but it needed to be done so that Coinbase could have this ordeal behind it and settled before it does decide to go public.
The company has been able to raise about $537 million from early-stage private investors. During its last round in 2018, it raised about $300 million, which valued Coinbase at $8 billion. Some of Coinbase’s investors included Andreessen Horowitz, Tiger Global, IVP, and Ribbit Capital.
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And while we are speaking about financials — last month, Coinbase revealed that its revenue more than doubled last year. According to its filing, it had net revenue of $1.14 billion in 2020, which was up from $483 million the previous year. Also in its filing, it reported a net income of $322 million for the year after posting a loss in 2019.
As of the end of 2020, the company also revealed that it has 43 million verified users with 2.8 million making monthly transactions.
Usually, inside a company’s filing, you are going to read language that favors the company to create an appeal and attract investors. After all, a company’s filing is one way for it to market itself while also sharing its financials with potential investors. Inside Coinbase’s filing, there was a letter from the founder and CEO, Brian Armstrong, that described the company like this:
Coinbase is a company with an ambitious vision: to create more economic freedom for every person and business. Everyone deserves access to financial services that can help empower them to create a better life for themselves and their families, but today we are a long way from this vision.
The current financial system is rife with high fees, delays, unequal access, and barriers to innovation. In many countries, citizens don’t have access to sound money, a functioning credit system, or even basic property rights. If the world economy ran on a common set of standards that could not be manipulated by any company or country, the world would be a more fair and free place, and human progress would accelerate.
That’s just a snippet of the letter that Armstrong wrote, but summing it up, he’s basically saying Coinbase is going to make that vision a reality. It may seem kind of optimistic but it’s an attractive vision, especially for people who have already been investing in cryptocurrencies and do see the market as the future. However, there are still some things to be wary of when it comes to cryptocurrencies and the cryptocurrency market.
It’s still new and that makes it a little riskier. Yes, Bitcoin is up almost 800% from last March. At the beginning of the week, it was at about $58,100, which was down from a high close to $62,000 just a week ago. If Bitcoin can continue to hit highs, it will make a Coinbase direct listing attractive to potential investors. That being said, it is unclear where the market will be in a year and if it can keep those highs.
For more information on Coinbase’s direct listing, other upcoming IPOs, and news on the IPO market, click here.