The cryptocurrency exchange Coinbase is joining the Nasdaq today. Coinbase’s listing is historic in that it’s the first major crypto exchange to go public in the United States, notes CNBC. However, instead of going public via a traditional initial public offering (IPO), Coinbase will go public via a direct listing. Here’s what you need to know:
- What is Coinbase? It’s a cryptocurrency platform founded in 2012. In other words, it lets users buy, sell, and trade cryptocurrencies like Bitcoin, Ethereum, and Litecoin, among others.
- What is Coinbase’s stock ticker symbol? Coinbase will trade on the Nasdaq under the ticker COIN.
- How is a direct listing different from an IPO? In an IPO an underwriter—usually a major bank—sets the target price range for a stock. In a direct listing, the company shares are sold directly to investors from the company’s employees and current investors themselves. Because of this, there is no share price range estimate that the company’s shares will start at, perhaps making trading more volatile.
- Have other major stocks gone public via direct listings? Yes, but Coinbase is the Nasdaq’s first major direct listing. The New York Stock Exchange, on the other hand, has held the direct listings for Slack, Spotify, Roblox, and Palantir.
- How much will COIN shares be when trading begins? No one can say because it’s a direct listing (see above). Nasdaq has given COIN a reference price of $250 per share—but there’s no way to know if that’s what shares will start at. Market demand will dictate the starting share price.
- What is COIN’s market cap? Again, no one knows until trading begins. However, if Nasdaq’s reference price is right, at $250 per share Coinbase would be worth $65.3 billion. As CNBC notes, if COIN shares do well today the company could hit a valuation of $100 billion, making it one of the country’s 85 most valuable companies.
- Should I buy COIN shares or just buy some bitcoin via Coinbase? Ha! If we knew the answer to that we could be rich. Bitcoin is trading around an all-time high of $63,753 at the time of this writing. Will bitcoin perform better than a cryptocurrency exchange stock in the short or long term? We wish we knew.