Coinbase employees spray champagne during the company’s initial public offering (IPO) outside the Nasdaq MarketSite in New York, US, on Wednesday, April 14, 2021.
Michael Nagle | Bloomberg | Getty images
Coinbase shares rose in premarket trading Thursday, a day after the cryptocurrency exchange went public in a direct blockbuster listing.
The company’s stock price rose more than 7% at 7:30 a.m. ET to approximately $ 352.50. Coinbase was briefly estimated at a whopping $ 100 billion during its Nasdaq debut Wednesday, a milestone for the cryptocurrency industry. The stock closed at $ 328.28 per share and valued Coinbase at $ 85.8 billion on a fully diluted basis.
Investors are responding to the news that Ark Invest founder and CEO Cathie Wood loaded approximately $ 245.9 million worth of Coinbase stock on the company’s first day of trading. Wood is an old bitcoin bull, believing that bitcoin and other digital tokens could eventually become part of the recommended wallet for everyday investors.
Coinbase’s debut has been hailed as a “turning point” for crypto, after years of skepticism from Wall Street giants and global regulators. But there are concerns that long-term volatility of digital assets and regulatory uncertainty could weigh on the company’s stock price – as well as fierce competition from other players like Binance, Kraken and Gemini.
“Risk management from a regulatory and operational perspective is much better on Coinbase,” compared to its competitors, Carol Alexander, a professor at the University of Sussex Business School, told CNBC’s “Squawk Box Europe” on Thursday.
“They also have a solid revenue stream from the fees and custody services. There’s no real competitor for them on the centralized exchanges because Kraken, Gemini – I don’t think they’re next to go.”
Coinbase had estimated sales of $ 1.8 billion in the first quarter of 2021, a nine-fold increase from the same period a year earlier, while profit increased from $ 32 million to between $ 730 million and $ 800 million. The number of monthly transaction users of Coinbase increased from 2.8 million three months earlier to 6.1 million.
Analysts at BTIG gave Coinbase a ‘buy’ rating on Thursday and a price target of $ 500 – 50% higher than the company’s closing price on Wednesday.
“We believe that COIN, the most popular consumer-facing cryptocurrency exchange in the US, is primarily positioned to be a primary beneficiary of the increased adoption of Bitcoin and other digital assets as it continues to grow in the US and internationally wrote the brokerage firm. in a note to customers.
Coinbase owned 11.3% of all crypto assets in the world on March 31, and BTIG’s analysts said this market share was at the heart of their bull case for the company. If the market value of all cryptocurrencies – which currently stands at $ 2.2 billion – continued to grow, “the benefit to the company could be enormous,” they said.
Bitcoin bulls are counting on more mainstream investors to warm up to the crypto space. Tesla placed a $ 1.5 billion bet on bitcoin earlier this year, while major US banks such as Morgan Stanley and BNY Mellon are launching crypto services for their customers.
The most popular digital currency hit an all-time high of more than $ 64,000 prior to Coinbase’s debut on Wednesday, but has since diminished gains slightly to trade around $ 62,473. Still, the price has more than doubled since the beginning of the year. But while bitcoin advocates see it as a store of value resembling gold, opponents argue it could be one of the biggest market bubbles in history.