Good morning,
Life with Bitcoin may be closer than you think.
Shares of the high-profile crypto company Coinbase will debut on the Nasdaq today as a direct listing. Yesterday, Nasdaq gave Coinbase a reference price of $250 a share, placing the value of the company at about $65.3 billion, according to CNBC.
Coinbase was expected to notch a $100 billion valuation. There has been plenty of ink spilled—including by my Fortune colleague Shawn Tully—about whether the company can justify such a high-flying number. “When you do the numbers, there’s no way to make an argument for owning this stock with a straight face,” David Trainer, an analyst at research firm New Constructs told Shawn.
Regardless, there is certainly a burgeoning, shall we say, enthusiasm for all things crypto, and Coinbase is one of the most hotly-anticipated listings of the year. Coinbase CFO Alesia Haas joined the company in 2018 after a stint at Oz Management, a global alternative asset management firm based in NYC, where she served as CFO. Brian Armstrong, CEO and co-founder of Coinbase, and Haas hosted a Reddit AMA in March. Haas has “been a major force behind the scenes helping this direct listing come to life,” Armstrong said.
“When Coinbase decided to go public, we thought it was an opportunity to provide more transparency into crypto,” Haas said to attendees. “Crypto has matured to a point where we wanted to be able to share with all investors and the public how far the industry has come. And we thought one way we could do that is by going public.”
The company reviewed the option of a traditional IPO, SPAC, direct listing or even a security token on the blockchain, Haas said. But after evaluation, they realized the “infrastructure is not quite there” for going public via a security token.
“We are pursuing the direct listing,” Haas said in the Reddit discussion. “We believe that takes us a step forward in meeting our mission as the open financial system because everyone can participate in our direct listing. It creates the transparency that we’re hoping to bring to Coinbase. But, hopefully, someday soon, we are going to make the right investments and get the right licenses and build the ecosystem that we want so there can be security tokens.” Haas added, “Coinbase is a crypto-only platform, where we only list security tokens. Unfortunately, the stock that we are offering, will not be available on Coinbase.”
A direct listing—a strategy previously undertaken by companies like Spotify and Slack— “tends to be quickest because moving existing shares to a stock exchange requires much less regulatory scrutiny,” according to a report by Deloitte CFO Insights. It tends to work for companies with high name recognition and not a lot of need for new cash, two descriptors which apply to Coinbase. Indeed, in a direct listing, no new shares are offered. And unlike IPOs which often come with mandated lockup periods, most existing shareholders can sell their shares as soon as trading starts. So employees and other early investors may cash in quickly. And if Coinbase achieves anything even close to a $100 billion valuation, they will be mightily temped to do so.
See you tomorrow.
Sheryl Estrada
sheryl.estrada@fortune.com
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