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Coinbase’s COIN Stock receives US$250 as the Reference Price from NASDAQ: Can it Open above US$340?

NASDAQ has set the largest US cryptocurrency exchange Coinbase’s COIN stock a reference price at US$250. The news comes just hours before the much anticipated direct listing of Coinbase on NASDAQ (the 2nd largest stock exchange in the world in terms of market capitalization). This stock reference price of US$250 is far below the current FTX pre-trading price of $600, although the 24-hour volume is thin and below US$4 million.

Coinbase crypto exchange has chosen the direct listing route instead of an IPO for going public. This means that the reference price set by NASDAQ is not a direct indicator of Coinbase’s market capitalization. This simply implies a US$65 billion valuation, which is much lower than the other estimates ranging within US$68-to-120 billion.

In its announcement, NASDAQ has said that the reference price of COIN was set because Coinbase’s “COIN has not had recent sustained trading in a private placement market.” This reference price was established after consultation with Coinbase’s financial advisors.

NASDAQ’s announcement made it clear that the set reference price at US$250 doesn’t reflect the opening price.

“Please note that the reference price is NOT an offering price and nobody has purchased or sold shares at that price. The opening public price will be determined based on buy and sell orders in the opening auction on Nasdaq.”

Reports say that Coinbase’s direct listing is the first major one on NASDAQ. It has been seen, on average across many major direct listings (including Spotify, Roblox, Asana, Palantir, and Slack) on NYSE (New York Stock Exchange) that the opening price was around 37% higher than the reference price. If this trend follows in the case of Coinbase’s (COIN) direct listing too then it means the opening price will be above US$340, having a valuation of around US$90 billion.

Available data points to the fact that the trading price of COIN could go to around US$600. Coinbase’s pre-listing contract CBSE is currently trading on the FTX exchange at a premium of 140% above the reference price, which is around US$600.

The first-quarter financial statement of 2021 also indicates a strong first day opening and trading of Coinbase’s COIN. In Q1 2021, Coinbase’s revenue increased to US$1.8 billion. This means that the net income of the company increased from a mere US$32 million during Q1 2020 to US$800 million in Q1 2021, an increase of US$768 million.

Coinbase has surprised all its 1,700 full-time employees just before the NASDAQ listing of COIN by providing them 100 shares each, which are worth US$25,000 at the US$250 reference price set by Nasdaq. The March 25 “thank you” gift to the Coinbase employees is a no-strings-attached grant. This means that the employees can sell them immediately after COIN’s direct listing after a few hours from now.

Coinbase’s Irish arm had handed out 105,510 share options to its employees in recent years. These newly announced 100 shares are in addition to the 105,510 share options given to the employees of the company’s Irish branch.

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