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Nasdaq gave Coinbase a reference price of $250 a share on Wednesday ahead of its planned direct listing, which would value the cryptocurrency exchange at about $65.3 billion on a fully diluted basis.
Coinbase is set to become the first major crypto business to go public in the U.S. and, should it reach a $100 billion market cap, will instantly be one of the country’s 85 most valuable companies. The company’s value has soared in the past year alongside bitcoin and ethereum, the primary currencies traded on the site.
Coinbase chose the direct listing path to the public market rather than pursuing a traditional IPO. That means instead of raising cash by selling new shares to a group of institutional investors, Coinbase is allowing existing stakeholders to start selling immediately at a market-driven price.
The reference price provided by Nasdaq reflects recent private market trades and input from investment bankers but does not indicate where the stock will open. This is Nasdaq’s first major direct listing. In the five significant direct listings that have taken place on the New York Stock Exchange — Spotify, Slack, Palantir, Asana and Roblox — the opening price was on average about 37% above the reference price.
If Coinbase opens with a similar percentage increase, the price would be around $343, very close to the average private market price in the first quarter of $343.58.
Coinbase said last week in announcing preliminary first-quarter results that revenue in the period surged ninefold to $1.8 billion, and net income climbed to between $730 million and $800 million from $32 million a year earlier. The vast majority of transactions on Coinbase involve the purchasing of bitcoin and ethereum, which have been on a historic tear, climbing over 800% and 1,300%, respectively, in the past year.
Bitcoin and ethereum over the past year
For the full year of 2020, revenue more than doubled to $1.28 billion, and the company swung from a loss in 2019 to a profit of $322.3 million.
Coinbase has mapped out a plan to be at the center of an emerging “cryptoeconomy,” in which financial transactions and online marketplaces will largely move to the blockchain, giving investors a wide set of digital currencies to buy and trade. But the company has acknowledged that short-term growth will primarily be dictated by the price and transaction volume of bitcoin.