Coinbase heads for US$94b valuation in Nasdaq debut

[NEW YORK] Cryptocurrency exchange Coinbase Global was set to be valued at more than US$94 billion in a stock market debut on Wednesday that marked another milestone in the development of bitcoin and other digital assets.

At 11.37 am ET, the company's stock was indicated to open at US$360 per share, up 44 per cent from a reference price of US$250 per share, making its implied value around three times that of exchange operator Nasdaq.

Coinbase's launch, done through a direct listing where no shares are sold ahead of the debut, marks a victory for digital currency advocates in a year that has seen a clutch of mainstream, top-tier firms dive into the space.

The San Francisco-based firm was valued at just under US$6 billion as recently as last September but has surged in line with bitcoin's gains this year.

The world's biggest and best-known cryptocurrency hit a record of over US$63,000 on Tuesday and has more than doubled in value this year as banks and companies warmed to the emerging asset.

Coinbase's listing is expected to accelerate that process by boosting awareness of digital assets among investors.

"The correlation to bitcoin will be very high after the stock stabilizes after listing," said Larry Cermak, director of research at crypto website The Block.

"When price of bitcoin goes down, it's inevitable that Coinbase's revenue and inherently price of the stock will decline as well."

Others experts said risks included Coinbase's exposure to a highly volatile asset that is still subject to patchy regulation.

Founded in 2012, Coinbase boasts 56 million users globally and an estimated US$223 billion assets on its platform, accounting for 11.3 per cent crypto asset market share, regulatory filings showed.

The company's most recent financial results underscore how revenues have surged in lock-step with the rally in bitcoin trading volumes and price.

In the first quarter of the year, as bitcoin more than doubled in price, Coinbase estimated revenue of over US$1.8 billion and net income between US$730 million and US$800 million, versus revenue of US$1.3 billion for the entire 2020.

Regulatory risks also loom, others said, as Coinbase increases the number of digital assets users can trade on its platform.

Coinbase last year suspended trading in major digital currency XRP after US regulators charged associated blockchain firm Ripple with a US$1.3 billion unregistered securities offering. Ripple has denied the charges.

"Given the expansion of assets covered by Coinbase, it's almost inevitable that other listings will come into question," said Colin Platt, chief operating officer of crypto platform Unifty.

REUTERS