CBSE, a pre-IPO Coinbase contract listed on crypto exchange FTX, traded at $594 at press time, implying a valuation over $140 billion for Coinbase ahead of its direct listing on Nasdaq.
What Happened: FTX’s Coinbase contract, CBSE, tracks Coinbase's market cap divided by 250,000,000. At the end of Coinbase’s first trading day, CBSE balances will convert into the equivalent amount of Coinbase Fractional Stock tokens.
Our pre-IPO @coinbase market is currently implying a ~140 Billion valuation https://t.co/ynQaYOBVSs pic.twitter.com/IaX3upDikO
— FTX - Built By Traders, For Traders (@FTX_Official) April 12, 2021
Stock tokens have recently emerged as a new investment avenue for market participants to trade fractions of companies’ shares. FTX itself has listed several stock tokens including Apple Inc AAPL and Amazon. com Inc AMZN, while more recently, leading crypto exchange Binance offered tokenized versions of Tesla Inc TSLA
“As of April 13, we estimate that there will be approximately 255,000,000 total Coinbase shares at the end of Coinbase's first public trading day,” said FTX on their website.
Why It Matters: With an implied revenue exceeding $140 billion, Coinbase’s debut as a public company would likely be one of the most valuable direct listings to date.
The event itself would be a milestone for the entire crypto industry as a cryptocurrency exchange goes public for the first time in history.
“We look at the Coinbase listing as an additional validation of the space, and a major PR opportunity for the entire industry to shine as the future of finance. Coinbase has more users and more revenues than many of the largest Wall Street players and is more profitable than any major exchange, this validation puts most skeptics at a crossroads having to re-evaluate their denial and frustration with the disruption coming at them from all sides,” commented Alex Mashinsky, CEO/Co-Founder of Celsius.
Brad Kam, Co-Founder of Unstoppable Domains, was another industry proponent who weighed in on the impact of the upcoming listing.
See also: How to Buy Coinbase IPO (COIN) Stock
“Coinbase’s direct listing on Nasdaq is a major step forward in bringing legitimacy and mainstream awareness to the digital asset sector as a whole. The success of Coinbase in growing to 56 million users and $1.8 billion in total revenue shows that consumer adoption is real, we just need tools that make crypto easy and intuitive,” he said.
However, not everyone was convinced by Coinbase’s record valuation estimates, and some market proponents believed that the company’s long-term outlook should be viewed more questionably.
“In the same way that Google and Facebook are heavily reliant on advertising, Coinbase’s revenue is heavily reliant on crypto transactions. But while Google and Facebook have evolved, there is little evidence so far that Coinbase will diversify,” said Collin Plume, CEO of Noble Gold Investments.
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