Coinbase plans to go public in $ 1 billion direct listing
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Coinbase, the largest cryptocurrency exchange in the United States, has filed a registration statement with the Securities and Exchange Commission to go public via direct listing.
The exchange, which allows people to buy and sell digital assets such as Bitcoin (CRYPTO: BTC), seeks to raise up to $ 1 billion in the offer and could be valued up to $ 100 billion, according to various media. The company is considering listing on NASDAQ.
By choosing to go public via a direct listing, instead of offering new shares as with a traditional IPO, existing investors and employees will convert their current interests in the company into shares and sell it to the public.
Direct listings also remove underwriters from the process which, in a traditional IPO, is responsible for generating interest from institutional investors, who have access to stocks before they enter the public market.
Direct quotes essentially allow retail investors to buy shares at the same time as institutional investors and are cheaper for the listing company.
Coinbase’s registration statement showed the company reported net income of over $ 322 million in 2020 on total revenue of $ 1.28 billion. This compares to a loss of $ 30 million in 2019 on revenue of $ 533.8 million.
Almost $ 1.1 billion of Coinbase’s revenue in 2020 came from transaction fees, while the rest came from subscriptions, services, and other revenue.
The company also had 43 million retail users, 7,000 institutions and 115,000 ecosystem partners in more than 100 countries on its platform.
Personally, I think the decision to go public with a direct listing is very much in line with Coinbase’s brand. The exchange helps investors access decentralized assets, and given that digital assets initially arose to help people escape the traditional financial system, a traditional IPO wouldn’t exactly have been on the mark.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
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