I will follow this IPO closely because it's not everyday we see a major exchange go public & direct listings are also rare.
Wednesday, April 14 is the date, Coinbase will public through a direct listing strategy not see by many other companies.
Coinbase Hype Machine
Coinbase seems to have a few tricks up their sleeve, in particular they now plan to release Q1 earnings just days before their direct listing IPO!
At this point I think we all know that Coinbases profitability is largely tied to their ability to generate trading fee's, and in a bull market which has seen record transaction volume across almost all exchanges, there's certainly going to be lots of fee's to collect.
In their SEC filings coinbase did release their 2020 financial information which showed the company was very profitable last year due to revenue generated from trading fee's.
If that's any indicator then we can expect that their Q1 results will be similar. Essentially days before their IPO their going to pump some good news into the market which is bound to lead to an increase in the valuation of company shares on opening day.
Is This a Loophole?
Normally companies that are going public are mandated to undergo a "quiet" period leading up to their listing.
This is in place to prevent the company from pumping out marketing hype in an effort to manipulate the initial share offering price.
Apparently releasing quarterly results is allowed! Although it's completely unusual for a company not publicly traded to publicly share their results, there's nothing stopping them I guess.
So Coinbase has decided to strategically schedule their IPO just days after releasing quarterly results which at this point are guaranteed to be positive.
Call it sneaky, call it manipulative, call it cleaver, call it whatever you like but it's going to act as marketing hype which my bet says will drive up share price on opening days.
Current Share Value
Coinbase had disclosed that through internal private sales of shares the average value is currently in the area of $344 USD.
With this in mind plus the marketing hype that will be generated when Q1 results are announced in the next week or two just ahead of their IPO, what do think we will see in terms of share price on open?
I'll say south of $500 USD, somewhere in the range of $450-490 will be my guess. Fun times, will be interested to see what happens here. In some ways this is uncharted territory.
I can't help but continue to think that a DCA strategy just like you would buy crypto might be the best bet here. Unless you have extra dollars to play with and are willing to gamble a bit, then perhaps you bite the bullet and fill a bag early.. Let me know what you think.
Ciao for now,
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