Popular cryptocurrency exchange Coinbase is making headlines in a big way. Reportedly, the company will go public via a direct listing or direct public offering (DPO) on April 14. As a result, Coinbase shares will trade on the Nasdaq Exchange under the ticker symbol COIN.
So, contrary to popular belief, the company isn’t going public through an initial public offering (IPO). One thing that’s undeniable, though, is that this direct public offering is getting a lot of attention and media coverage.
Perhaps that’s because Coinbase is a very popular platform for buying and selling Bitcoin (CCC:BTC-USD) and other cryptocurrency coins.
But the billion-dollar question is: should investors buy the shares once they’re available for trading? Let’s drill down on the essential facts, and see if we can come up with a sensible conclusion.
The Coinbase Public Debut Will Be Historic
Interestingly, we are actually witnessing a historic moment. That’s because the Coinbase public offering represents the first time a major cryptocurrency exchange is going public.
It’s proof that cryptocurrencies are gaining traction in achieving mainstream acceptance. After all, not just any company will be accepted to the Nasdaq Exchange.
And if any crypto platform deserves to be the first to get listed, it’s Coinbase. It is the largest U.S.-based cryptocurrency exchange, and it allows its users to buy and sell around 50 different cryptocurrencies.
The public offering is well-timed, in my opinion, since price of Bitcoin recently broke through the crucial $50,000 level.
Thus, renewed interest in Bitcoin should help to boost Coinbase’s public profile and brand-name recognition.
Moreover, it seems like having a direct listing instead of an IPO is a sensible move. A direct listing can allow the company to sell shares directly to the public without any intermediaries involved, potentially making the process more cost-efficient.
A Huge Event
As I’ve said, there’s plenty of buzz associated with the Coinbase direct public offering.
The company will reportedly sell 114.9 million COIN shares to the public. Don’t be surprised if those shares are bought up quickly.
Analysts have estimated Coinbase’s value in the range of $70 billion to $90 billion. However, there are estimates that have gone as high as $100 billion.
And, there’s no doubt that Coinbase is a fast-growing company. During the first quarter of 2021, Coinbase generated a whopping $1.8 billion in revenues, along with net income between $730 million to $800 million.
Just to give you a comparison, for the entire year of 2020, the company generated $1.3 billion in revenues and profits of $322 million.
So, will the Coinbase direct offering be the Nasdaq Exchange’s most news-worthy event in 2021? It’s entirely possible, which means that investors should prepare for a media frenzy — and high trading volume — as COIN stock goes public.
High Price Target
Apparently, Coinbase will reveal its reference price for COIN stock shares a day before trading begins.
One thing to bear in mind is that the share price is likely to move higher very quickly. And as InvestorPlace contributor William White reports, one prominent financial expert is substantially raising his price target.
Specifically, D.A. Davidson analyst Gil Luria recently hiked his price target on COIN stock to $440. That’s more than twice Luria’s previous price target of $195.
It would not amaze me if more analysts start raising their price targets as well. Sometimes, even financial experts get caught up in the hype when there’s a high-publicity stock debut.
My recommendation is to exercise caution with the Coinbase public offering. Analysts aren’t always right in their share-price forecasts. Moreover, extreme hype can lead to extreme disappointment.
COIN Stock: The Bottom Line
No doubt about it: it’s exciting to witness this moment in history as COIN stock goes public.
But, let’s not get so caught up in the hype that we end up over-leveraging ourselves. A moderate position is fine, as you can always add more shares if the price goes down.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.