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How to trade Coinbase's IPO

Coinbase is the largest cryptocurrency exchange in the US. It acts as a broker for both retail and institutional traders for crypto assets such as bitcoin, ripple and other altcoins. The company debuted its shares via a direct listing on the NASDAQ stock exchange on 14 April 2021. Read on to discover how to get involved in Coinbase's IPO and how to trade on newly-listed Coinbase shares through our trading platform.

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Coinbase going public and IPO date

Coinbase debuted on the stock market on 14 April 2021 under the ticker ‘COIN’. The listing was initially scheduled for March but had to be postponed due to legal issues. The company opted to go public via direct listing instead of the traditional IPO route. The cryptocurrency platform planned to register almost 115 million shares of Class A common stock in a direct listing. This means that it would not be selling any new stock; instead, it would be allowing existing stakeholders to sell their shares to new investors.

Coinbase’s share price

Coinbase stock opened at a price of $381 per share, with a market cap valuation of approximately $100bn, although some analysts predicted that this was overvalued. According to an analysis by New Construct, Coinbase’s revenue would need to reach more than 1.5x the combined revenues of the NASDAQ Composite and IEX in 2020 in order to reach its upper estimated valuation. This suggests that the company’s valuation should have actually been a fraction of the estimated amount, given the revenues of these two established stock exchanges.

Trade on Coinbase’s share price >

How to trade the Coinbase IPO

  1. Open an account. A live trading account will give you exposure to over 9,000 shares and ETFs, including Coinbase’s new listing.
  2. Search for your chosen asset in our product library.
  3. Choose whether you want to open a long position and ‘buy’ or a short position and ‘sell’. Please note that some trading restrictions may apply on initial trading.
  4. Choose your position size and place the trade. Here, you can apply risk-management orders such as stop-loss and take-profit orders.
  5. Monitor your trade and close out the position when your target price is reached.

Why might investors be interested in Coinbase’s IPO?

Coinbase’s IPO may appeal to investors for a number of reasons:

  • Coinbase is the first US-based cryptocurrency company to go public on the stock market.
  • The company has proven to be profitable over the previous financial year and first quarter of 2021. This is likely to increase investor sentiment towards its upcoming IPO.
  • Coinbase is seen as a growth stock. This means that its performance can go in either direction, but these types of stocks are often favoured by growth investors and position traders that are looking to buy and hold for a longer period of time. This reflects their expectation for the stock to profit in years to come.

What are the risks of Coinbase’s IPO for traders?

Here are some of the risks that traders should consider when speculating on Coinbase’s IPO:

  • Coinbase could fall victim to over-valuation. Supply and demand will have an effect on its share price, meaning that while its shares could boom on its opening day, they could easily go the other way and open at a lower price or decrease throughout the day.
  • Coinbase has a number of high-profile competitors including Binance, Gemini, Bithumb and Kraken (which is also considering an IPO for 2022). Some of these platforms may offer cheaper trading services in comparison with Coinbase.
  • Some investors see the crypto market as overvalued and suggest that Coinbase’s valuation may decrease when the crypto market cools off. Company analysis including P/E ratios indicate an unusually high number right now, which may fall as time goes on.

How has Coinbase performed financially pre-IPO?

Coinbase has reported phenomenal results in the recent financial year. The company has 56 million verified users as of April 2021, in comparison with 34 million in 2020. Its latest results show that the company turned over $1.8bn in the first three months of its fiscal year, which is more than it made over the whole of 2020, when it generated revenue of $1.3bn.

This may be a result of a rally in the price of bitcoin throughout 2020, as attention shifts to the exchanges that cryptocurrencies are traded on and when they will go public. Therefore, Coinbase’s IPO may be particularly appealing to investors with an interest in cryptocurrency trading.

Coinbase’s IPO and the price of bitcoin

The price of bitcoin and other cryptocurrency assets tends to have an effect on Coinbase’s company fundamentals. The company holds cryptocurrency assets in its balance sheet and these values fluctuate significantly due to the volatile markets. Coinbase also relies heavily on the overall performance of the cryptocurrency market, which brings a certain level of risk to investing in the company.

Keep up to date with Coinbase news

It is important to stay up to date with news after Coinbase’s IPO, whether this be relating to company earnings reports, economic announcements or the cryptocurrency market in general.

Our news and analysis section is updated daily for all financial markets. Within the platform, our news and insights tools also offer more specific details on the share market, with a Reuters news feed and Morningstar equity research reports. These reports will be released on the platform after 14 April, once Coinbase stock is available to trade. Please note that these exclusive features are only available with a live account. You can get started by registering for an account.

FAQS

When will Coinbase go public?

Coinbase is expected to debut its shares on the NASDAQ exchange on 14 April 2021. This will make its shares available to trade to the public, including retail and professional investors.

Can I get notified for Coinbase IPO updates?

Our trading platform comes with a range of trading alerts that you can set for your chosen instrument. Once Coinbase is available to trade, you can set up price alerts for that particular share, or general market and economic announcements.

How can I trade on Coinbase’s IPO?

You can choose to spread bet or trade CFDs on Coinbase’s share price with us after its IPO. To find out which product is better suited for you, consult our guide to the differences between spread betting and CFD trading.

What are Coinbase’s trading hours?

Coinbase’s trading hours will follow the opening and closing times of the NASDAQ exchange, where the company is listed. These are between 2.30pm and 9pm (UK time). Learn more about trading on stock market hours.

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Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.