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Friday, January 27, 2023

Coinbase DPO: everything you need to know about going public

Given the floor debut of the US crypto exchange Coinbase, many investors are already scratching their feet. Here you can find out what you need to know about the IPO, where the share is tradable and whether it is worth buying.

It’s getting hot: Today is the day. Hardly any other security was eagerly awaited as that of the young company from San Francisco. Now, after months of waiting, Coinbase will finally go public on the US tech exchange NASDAQ ´ (trading symbol: COIN). With this, Coinbase enters the glorious halls of Apple, Amazon, Google, Microsoft and Facebook.

Strictly speaking, the floor debut is not an Initial Public Offering (IPO), but a Direct Public Offering (DPO). Both IPOs differ from one another in certain key areas. A key difference, for example, lies in the holding period. While an IPO stipulates a holding period of up to six months, there is no holding period for a DPO. That means the stock price could fall again shortly after the DPO if shareholders want to realize quick profits.

While an exact issue price has not yet been set, Coinbase announced in mid-March that the average price of its pre-sold shares was $ 343.58. This could also result in an initial concrete company value of around 68 billion US dollars. Experts estimate these key figures even higher. Accordingly, a valuation of 100 billion US dollars cannot be ruled out. The current crypto bullrun should also have a positive impact on the estimates.

The extremely positive business figures for the first quarter of 2021 also support the latter assumption. With a turnover of 1.8 billion US dollars and a net profit of between 730 and 800 million US dollars, sales of Coinbase grew by a full 208 percent compared to the fourth quarter of 2020, while net profit even quadrupled.

Coinbase share: pros and cons

In his Friday comment , BTC-ECHO editor-in-chief Sven Wagenknecht explained the pros and cons of the share in detail.

On the PRO side , the developments from Coinbase towards becoming a “universal financial institution” should be mentioned in particular . In addition to crypto currencies, the product range of the crypto exchange now also includes: debit cards, savings plans, credit services, index tokens, staking and others. The services are to be expanded over the next few years. In addition, by being listed on NASDAQ, Coinbase can now benefit greatly from the inflow of funds from the very large funds and pension funds. The number of users of the crypto exchange is also growing. As the largest and best-known crypto broker in the USA, Coinbase should continue to benefit enormously from the market growth. In addition, Coinbase is profitableThe last quarterly figures show that. Last but not least, the service for institutional investors could turn Coinbase into a kind of “crypto house bank” for large investors.

On the contra side , Wagenknecht sees the valuation of Coinbase in particular, the appraisal is euphoric and the potential for disappointment is accordingly large. In addition, the competition does not sleep . Other crypto financial service providers are also positioning themselves in the market and doing everything they can to gain market share. As a result, the trading platform is also forced to lower fees in the future, which would reduce the profit margin . In addition, the still unresolved regulatory situation is a problem for Coinbase. The Kypto exchange is very dependent on the goodwill of politics and the SEC. After all, there are decentralized financial applications also a construction site that the central trading platform will have to face in the long term.

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Every investor will have to decide for himself whether an investment in the share is worthwhile. Coinbase definitely has the potential to make one of the floor debuts of the year with its IPO. The financial world is staring at New York and eagerly awaiting the ringing of the stock market bell.


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