Coinbase, the largest cryptocurrency broker in the U.S., announced on Thursday (31) that its expected direct listing on the exchange will take place on April 14. The company will release its first quarter financial results a few days earlier, on April 6, according to a source close to the company.
The plan is unusual and significant because the results will arrive a few days before the company offers its shares to the public and, therefore, will add a new orientation for investors looking to determine how much Coinbase’s shares should be worth.
The announcement came weeks after Coinbase published its 2020 financial results as part of a mandatory S-1 regulatory process before going public. These results showed that the company made a profit of $ 322 million in 2020 with revenues of more than $ 1.2 billion – a big leap from 2019, when Coinbase had a loss of $ 30 million from US revenues $ 522 million.
The announcement of impending earnings will mark the first time that Coinbase has publicly released the results for a given quarter. Given the huge rise that has been occurring since December, the company’s first quarter is likely to be the best quarter in its history, which gets most of its revenue from trading commissions.
First quarter earnings are also expected to prompt analysts and prospective investors to reevaluate the company’s stock value. At the end of February, some private equity transactions valued Coinbase at $ 104 billion, a figure that some analysts said was too high. More recently, Coinbase reported that the average price of its shares sold in private transactions between January 1 and March 15 was $ 343.58 – a value that translates into an overall valuation of $ 68 million.
If Coinbase shows good results in the first quarter, that valuation is likely to increase and result in the company’s stock price above $ 343.
Coinbase’s arrival on the exchange will be an important milestone for the market as a whole and will also provide insight into how Wall Street reacts to an industry that has unique cycles and volatility.
It is unclear, for example, how markets might react to the arrival of another so-called “crypto winter” such as February 2018, when Bitcoin’s price dropped 65% and other cryptocurrencies plummeted along with it.
Coinbase’s decision to go public also coincides with an extraordinarily frivolous period in the broader markets.
In the past six months, numerous companies have seen their shares rise by more than 100% on the first trading day, while there has also been a rush to invest in SPACs (special purpose acquisition companies), which are public “blank check” funds whose only goal is to acquire another company. All of this has made the stock market overall record-breaking – although public offerings last week suggested that the recent momentum is losing steam.
In the case of Coinbase, the company is not seeking a conventional initial public offering (IPO), which involves working with Wall Street banks to align investors who have the first chance to buy new shares, usually at a significant discount. Instead, when using a direct listing, Coinbase will not issue new shares, but will provide a vehicle for employees and first investors to sell their shares at a price determined by the market.
Coinbase’s decision to announce earnings results before its public listing is also highly unusual, in part because companies on the verge of going public are subject to a “silence period” imposed by the SEC that strictly restricts the scope of its activities. public communications.
In this case, the disclosure of results seems to qualify for an exemption from a period of silence that allows companies to disclose non-prospective information that arise in the normal course of business.
* Translated and edited with authorization from Decrypt.co