Coinbase IPO Forecast: What will COIN IPO price be? COIN is up as ARK Invests
- Coinbase Nasdaq: COIN set a reference price of $250.
- COIN high trade was at $428 valuing COIN at nearly $90 billion!
- COIN shares fell sharply throughout the session to close at $328.28.
Well, that provided some much-needed volatility As the VIX index remains slumped at yearly lows below 17! It took a while but COIN eventually opened at $381 and shot higher breaching through $400 to top out at $429.54. From here it got a bit tricky as COIN steadily dropped for the remainder of Wednesday's session to close out at $328.28.
At the time of writing, COIN is trading $362.12 in Thursday's pre-market a gain of 10%. Volatility is going to be nice and high in this one! Cathie Wood of ARK Invest took a nice position in COIN yesterday, purchasing about $240 million worth of COIN shares.
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Coinbase IPO price prediction
Coinbase Nasdaq: COIN opened at $381 from a reference price of $250. This values COIN at a lot! Well more like nearly $90-100 billion, but hey that is a lot right! To put it into context that is more than the combined three largest stock exchanges in the world, the Nasdaq, NYSE and Euronext. Some people may not be as familiar with EuroNext but it is basically every major European exchange except London and Germany. But it does include many of the largest UK and German companies as part of its listing. So it is pretty big!
Obviously, the Nasdaq and NYSE need no introduction! So COIN is it worth more than those three combined?
COIN announced just before its IPO, well not an IPO but a direct listing. But everyone uses the term IPO these days, it is a catch all. There is a slight difference between an IPO and a direct listing. The main difference is a direct listing allows employees and investors to sell existing shares to the public. In an IPO the company issues new shares to sell.
Now COIN made public its finances just before its IPO, oh wait, direct listing! got to get that right!
COIN said on April 6 that revenue for Q1 2021 would be $1.8 billion. Assuming revenue remains stable that is an annualized revenue of $7.2 billion (nice math!). At the current valuation of nearly $90 billion then COIN is trading on nearly 13 times revenue estimates. COIN trades on a price-earnings ratio (P/E) of nearly 200. That is close to the top 10% of companies globally. So the valuation metrics are stretched. That is the case for a lot of companies currently.
What this means is that long erm investment decisions may be more cautious while short-term trading becomes more technical.
Yesterday's close of $328.28 will be the first support level as will the VWAP (volume-weighted average price) of $356.12. Outside of that given this is a new listing we do not have a lot of technical levels to keep an eye on.
One other reason for concern for longer term investors may be the difference between voting rights in the A and B shares. B shares have twenty times the voting rights but it was the A shares that listed on the Nasdaq. B shares are largely held by existing investors and Brian Armstrong the CEO of COIN. Brian Armstrong will hold over 20% of the voting power. This issue was at the centre of Deliveroo's recent IPO in London. Institutional investors were highly reluctant to invest in a company with limited voting power based on their shareholdings.
At the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
