After months of wait and uncertainty, cryptocurrency exchange Coinbase finally received the greenlight from the U.S. Securities and Exchange Commission (SEC) to list its shares on the Nasdaq Composite. Since filing for an IPO last December, the crypto giant has decided to make its trading debut on the stock exchange through a direct listing on April 14th.
Regulatory Scrutiny?
Just days ago, Coinbase announced that it hired Brett Redfearn, an ex-SEC director, to run its capital markets business. Mr. Redfearn’s hire comes at a time of increased attention from lawmakers. With the exchange going public, its past controversies have also been in full highlight. Last week, the Commodity Futures Trading Commission fined Coinbase $6.5 million, as the exchange was accused by the CFTC of “recklessly deliver[ing] false, misleading, or inaccurate reports concerning transactions in digital assets.”
Is Coinbase’s Valuation Justified?
The company, via its direct listing, could be valued at more than $100 billion. Its astronomically high valuation is largely thanks to its explosive growth. Coinbase generated a total revenue of $1.3 billion and an adjusted EBITDA of $527.4 million in 2020– representing a yearly growth of 240% and 2200% respectively. Its retail user base also grew from 13,000 to 43 million between 2012 and 2020. With the technology sector and NASDAQ components trading at incredibly high valuation multiples, Coinbase’s valuation is fairly reasonable to say the least.
In an amended S-1 filing with the SEC, Coinbase stated that it planned on selling 114.9 million shares through its direct public offering. Coinbase will trade under the ticker COIN, and its reference price will be available the night before the listing. As for dividends, Coinbase stated that it would not pay any to its common stock shareholders and intended to “retain all available funds and any future earnings” for operation.
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