Coinbase, the leading US-based cryptocurrency exchange, has officially confirmed the date for its highly anticipated direct public offering (DPO). The company’s S-1 registration statement related to the listing of its Class A common stock has been declared effective by the Securities and Exchange Commission (SEC).
Trading of Coinbase’s Class A shares under the ticker symbol “COIN” is expected to begin on April 14 on the Nasdaq Global Select Market. In addition, the company announced that it will release its first-quarter financial results on April 6, eight days ahead of the original schedule.
Background of the Direct Listing
Coinbase initially filed its S-1 with the SEC on February 25, outlining its plan to go public via a direct listing. This alternative method to a traditional initial public offering (IPO) allows existing shareholders—such as employees and early investors—to sell their shares immediately upon listing, without a lock-up period.
Last month, the company registered 114.9 million shares to be available for trading at the time of the listing. Prominent financial institutions including Goldman Sachs, Citigroup, and J.P. Morgan are serving as financial advisors for the offering.
Understanding Direct Public Offerings (DPOs)
A Direct Public Offering enables a company to list its shares on a stock exchange without issuing new shares through underwriters. In a DPO, current shareholders can freely trade their holdings on the first day of listing. This differs from traditional IPOs, where new shares are issued and early investors are typically subject to a lock-up period restricting sales for a predefined timeframe.
Coinbase has structured its shares into two classes: Class A and Class B. Each Class A share carries one vote, while each Class B share carries 20 votes. Class B shares can also be converted into Class A shares at any time.
Company Profile and User Base
Founded in 2012, Coinbase provides a platform for trading and custody services for cryptocurrencies. As of December 31, 2020, the exchange had 43 million verified users, reflecting a 34.4% year-over-year increase. The platform also facilitated approximately $193 billion in trading volume during 2020, a 141.7% increase from the previous year.
In the private markets, shares of Coinbase traded between $200 and $375 during early 2021. The average share price from January to mid-March was $343.58. Based on the total outstanding shares, the company’s valuation stands at approximately $67.6 billion, though it had previously reached as high as $90 billion.
Financial Performance Overview
Coinbase has demonstrated substantial financial growth over the past two years:
- 2019 Revenue: $534 million
- 2020 Revenue: $1.277 billion
The company also shifted from a net loss of $30.4 million in 2019 to a net profit of $322 million in 2020.
Revenue Breakdown
- Transaction Fees: 85.8% of total revenue, generated from user trading activities.
- Subscription and Services: 3.5%, primarily from custody fees for storing digital assets.
- Other Revenue: 10.6%, which includes income earned by using company-held crypto assets to facilitate customer trades during system outages.
Major Shareholders and Voting Rights
Prior to the listing, key ownership and voting interests were distributed among the following individuals:
- Brian Armstrong, Co-Founder and CEO: holds 9.4% of Class A shares and 21.6% of Class B shares, with 21.5% of the total voting power.
- Marc Andreessen: owns 20.8% of Class A and 14.1% of Class B shares, controlling 14.1% of votes.
- Frederick Ernest Ehrsam III: holds 9.7% of Class A and 8.9% of Class B shares, with 8.9% voting rights.
- Fred Wilson: possesses 8.2% of Class B shares and 8.1% of voting power.
- Other executives including Surojit Chatterjee and Paul Grewal also hold significant Class A shares.
Frequently Asked Questions
What is a direct listing?
A direct listing allows a company to go public without issuing new shares or using underwriters. Existing shareholders can sell their shares directly on the exchange on the first day of trading.
How does Coinbase generate revenue?
The vast majority of Coinbase’s revenue comes from transaction fees paid by users. Additional sources include subscription services and other operational activities.
What is the difference between Class A and Class B shares?
Class A shares grant one vote per share, while Class B shares offer 20 votes per share and can be converted to Class A shares. This structure helps founders retain control.
When will Coinbase stock begin trading?
Coinbase’s Class A common stock is scheduled to start trading on the Nasdaq Global Select Market on April 14 under the ticker “COIN.”
What was Coinbase’s valuation before the listing?
Based on private market transactions, Coinbase’s valuation was approximately $67.6 billion, though it had previously reached up to $90 billion.
Where can investors access the company’s financial reports?
Coinbase released its Q1 financial results on April 6. For ongoing updates, investors can refer to official SEC filings or major financial news platforms. 👉 View real-time market data
Coinbase’s public listing represents a major milestone not only for the company but also for the broader cryptocurrency industry. Its performance on the public markets will be closely watched by investors and industry participants alike.