The much awaited Coinbase’ s COIN stock has been given a reference price of $250 on NASDAQ, ahead of its direct listing which is just a few hours away. This price is way lower than its pre-trading price on FTX which is $600.
The crypto exchange is taking the direct listing route instead of the common IPO, which implies that the reference price is not a direct reflection of its market cap. This gives it a valuation of $65 billion which is lower than other estimates which had quoted somewhere between $68 billion to $120 billion.
According to a statement from NASDAQ, the reference price is an indication of its previous transactions. This value was given due to the fact that the stock has not had any previous long trading history in a private placement market.
Interestingly, the Brian Armstrong led company gave each of its full-time employees 100 shares of the company’s stock as a “thank you” gift. This would be worth around $25,000 based on the $250 NASDAQ reference price.
Coinbase IPO: Reference Price Vs Trading Price
Per the announcement, reference price does not in any way give an indication of the opening price. It clearly stated that the reference price is not the selling price and it is only based on the buy/sell orders on the platform.
COIN is NASDAQ’s first major direct listing. The previous five direct listings on the NYSE had, on the average, their opening price about 37% higher than their reference price. If this trend is maintained, that would make the opening price for COIN to be above $340 at a valuation of $90 billion.
The price at which Coinbase’s would trade could be a lot higher given that its pre-listing contract CBSE is trading at $600 on FTX exchange currently, which is around 140% above the reference price. Another factor that could boost its first day performance is the financial statement of Q1 2021 in which it made a net profit of $800 million, as against $32 million made in the previous Q1.