The arrival at Nasdaq of the cryptocurrency exchange Coinbase on Wednesday is one of the most anticipated events of the year on Wall Street. About 130.7 million Coinbase shares will go on the market on Wednesday, the group said in a stock document on Tuesday.
The first company entirely dedicated to cryptocurrencies to enter an American stock exchange, Coinbase, which will be listed under the symbol COIN, is already a heavyweight. The Nasdaq set the benchmark price on Tuesday evening at 250 dollars (209 euros) per share. Taking into account all the securities in circulation, stock options and shares subject to restrictions, the group’s valuation reaches 65.3 billion dollars (54.6 billion euros). This would represent the biggest valuation for a US company IPO since Uber in 2019.
The reference price remains indicative, however, Coinbase having chosen not to make a traditional IPO, but a direct listing. This procedure does not allow it to raise new money, but offers shareholders already present in its capital – the founders, employees and historical investors – the possibility of selling their stakes on the market.
Spotify, Slack, Palantir and Roblox had used this method for their entry on Wall Street.
A profit multiplied by 25
Founded in 2012 in San Francisco (California) by Brian Armstrong and Fred Ehrsam, the platform allows you to buy and sell around fifty cryptocurrencies, including bitcoin and ether. It claims 56 million users and just over 6 million people transacting every month, according to estimates of its first quarter results released in early April.
The company has benefited from the meteoric rise of bitcoin for about a year, with the cryptoactive price rising from $ 6,500 ($ 5,438) last April to over $ 62,000 ($ 51,875) on Tuesday. In the wake of the queen of cryptocurrencies, other virtual currencies, such as ether, Litecoin or Stellar Lumens, have also jumped.
“As bitcoin has more than doubled in the last six months and cryptocurrencies have become more popular with large investors, it can be clearly argued that they are increasingly gaining favor with the general public,” said Michael Hewson, analyst Head of CMC Markets UK.
As a result of this craze, Coinbase’s revenue nearly increased tenfold in the space of a year, reaching $ 1.8 billion (€ 1.5 billion) in the first quarter, according to estimates. of the group. Its profit, in a range between 730 million and 800 million dollars (610 and 669 million euros), was multiplied by 25.
A mistrust linked to volatility
The success of cryptocurrencies and Coinbase gives ideas to some rivals: the boss of the Californian cryptocurrency exchange platform Kraken, told CNBC last week that he hopes to bring his company to the stock market next year, also via a listing direct.
If the economy seems favorable to Coinbase, caution remains in order among observers, who recall the company’s dependence on virtual currency prices, which are particularly fluctuating. Before its spectacular surge in recent months, bitcoin had experienced disappointments, especially during 2018 when the currency continued to tumble.
Some are also drawing attention to the mistrust of lawmakers in several countries, who are concerned about the use of cryptocurrencies for illicit purposes.
“Is Coinbase going to prove popular with small holders? There is little doubt, because demand and interest are expected to be high, ”summarizes Michael Hewson. “The real question is whether any valuation will be sustainable, especially given the large number of governments that are not really keen on cryptocurrencies. Future regulations represent a clear and immediate danger as well as a probable negative wind ”in the longer term.
Charges and commissions against the group
Coinbase was recently pinned down by the US Futures and Derivatives Regulatory Authority (CFTC), which accused it of providing “false, misleading or inaccurate” information about cryptocurrencies and of manipulating the market between 2015 and 2018.
Without acknowledging its wrongdoing, Coinbase acquitted itself of a fine of 6.5 million dollars (5.4 million euros) and the company was forced to postpone its date of entry on Wall Street.
Another factor that could put Coinbase at a disadvantage is its commissions, which the company earns. These withdrawals are higher than at some of its competitors, notably Binance. But this one, founded in China, seems to alarm regulators even more than Coinbase. According to Bloomberg, the CFTC recently opened an investigation into whether Binance, which is not reported to the agency, had violated U.S. derivatives law.