Coinbase Global Inc was valued at $86 billion at the end of its NASDAQ debut on Wednesday, in a choppy day of trading when its valuation went as high as $112 billion.
Coinbase’s stock market debut, done through a direct listing where no shares are sold ahead of the opening, marks another milestone in the development of bitcoin and other digital assets.
It comes amid a surge in the value of cryptocurrencies which has lured a clutch of mainstream, top-tier firms that have dived into the space.
Coinbase’s stock opened at $381 per share, up 52.4 percent from a reference price of $250 per share set on Tuesday though only 10.9 percent above the $343.58 volume-weighted average price Coinbase’s shares were trading at privately in the first quarter of 2021.
The stock closed at $328.28, which gives Coinbase a fully diluted valuation of $85.78 billion, including unvested stock options and restricted stocks, and a market capitalization of $65.39 billion.
Founded in 2012, the San Francisco-based firm boasts 56 million users globally and an estimated $223 billion assets on its platform, accounting for 11.3 percent of crypto asset market share, regulatory filings showed.
“We’re just very grateful to be able to bring transparency to the crypto economy, the ecosystem that we’ve all been building over the last 10 years,” Coinbase Chief Financial Officer Alesia Haas said in an interview.
“It just brings this level of recognition that this is an industry that is here, that is growing, and that (is not just) in the corners.”
The world’s biggest and best-known cryptocurrency hit a record of over $63,000 on Tuesday and has more than doubled in value this year as banks and companies warmed to the emerging asset.
As Coinbase Global Inc’s multi-billion dollar stock market listing accelerates cryptocurrency’s leap to the top table of finance, its founder and CEO Brian Armstrong is poised to reap the benefits of the company’s nine-year journey.
Armstrong owns 21.7 percent of the San Francisco-based cryptocurrency exchange, filings show – a stake worth around $20 billion given Coinbase’s projected value.
Such a paper fortune might have been hard to imagine when Armstrong founded Coinbase in 2012, just four years after bitcoin was invented by the pseudonymous Satoshi Nakamoto.
Bitcoin’s peak that year of just $16 reflected the fact that knowledge of cryptocurrencies was mostly limited to online enthusiasts. On Wednesday it set its latest high of nearly $65,000.
Back in 2012 the prospect that major financial firms and household name companies would embrace the technology would have seemed far-fetched to many in the financial industry.
Yet some who met Armstrong during Coinbase’s early days spoke of his understanding of how cryptocurrencies could jump from obscurity to the mainstream.
“I remember meeting Brian in 2013/2014,” said Tom Glocer, an early Coinbase investor and former CEO of Thomson Reuters.
“Brian had a well-formed, mature vision of the key elements that needed to be built to bring crypto into mainstream finance and commerce.”
Beholden to bitcoin?
The company’s most recent financial results underscore how revenues have surged in lock-step with the rally in bitcoin trading volumes and price.
In the first quarter of the year, as bitcoin more than doubled in price, Coinbase estimated revenue of over $1.8 billion and net income between $730 million and $800 million, versus revenue of $1.3 billion for the entire 2020.
“The correlation to bitcoin will be very high after the stock stabilizes after listing,” said Larry Cermak, director of research at crypto website The Block.
“When the price of bitcoin goes down, it’s inevitable that Coinbase’s revenue and inherently the price of the stock will decline as well,” said Cermak.
Regulatory risks also loom, others said, as Coinbase increases the number of digital assets users can trade on its platform.
Coinbase last year suspended trading in major digital currency XRP after US regulators charged associated blockchain firm Ripple with a $1.3 billion unregistered securities offering. Ripple has denied the charges.
Brian Armstrong (Left), cofounder and CEO of Coinbase and Vanity Fair special correspondent William D. Cohan speak onstage at Vanity Fair’s 6th Annual New Establishment Summit for the Performing Arts on October 23, 2019 in Beverly Hills, California. Photo: AFP
