By means of a direct listing, Coinbase plans to go public, the organization revealed today in a blog post.
The business reported last month that it had confidentially lodged an S-1 with the SEC.
The announcement by Coinbase is as follows:
Coinbase Global, Inc. today announced its intent to become a publicly-traded company pursuant to a proposed direct listing of its Class A common stock. Such proposed listing is expected to be pursuant to a registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”). Coinbase Global, Inc. previously announced on December 17, 2020 that it had confidentially submitted a draft registration statement on Form S-1 with the SEC. The Form S-1 is expected to become effective after the SEC completes its review process, subject to market and other conditions.
This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). This announcement is being issued in accordance with Rule 135 under the Securities Act.
Direct listings have been rising in success steadily. And it’s not that shocking to see a business like Coinbase opt for this route to public markets, including some outsized first day pops from recent software IPOs.
In heading this road, the business is not alone. After analyzing the late-2020 IPO market, Roblox postponed his own offering, choosing instead for a direct listing of his own.
Through eliminating the need to price and sell a block of fresh equity, direct listings enable businesses to bypass elements of the conventional IPO. Alternatively, a corporation actually publishes its shares, which then become eligible for trade.
Not every organization, of course, has an appropriate profile for the system to prove appealing, and the direct listing agency loses the opportunity to collect new primary capital; the most well-known and wealthiest businesses may find the most attractive direct listings.
What is a Direct Listing?
Companies who wish to create a stock offering do not have the money to compensate underwriters, do not want to dilute current securities or may want to escape lockup clauses by developing fresh ones.
Instead of an IPO, businesses with these issues frequently opt to continue by utilizing the direct listing mechanism.
In a direct listing, without the aid of any intermediaries, the company offers securities directly to the market. No underwriters or other intermediaries are involved, no new securities are sold and no lock-up period occurs.
The company’s current owners, sponsors and even workers keeping shares will sell their securities directly to the market.
The zero- or low-cost profit, however, often comes with some risks for the company, which also filter down to investors. There is no support or guarantee for the selling of shares, no discounts, no secure long-term buyers, no chance of greenshoe options and no security by major shareholders before and after the listing of securities against any fluctuations in the share price.
The greenshoe choice is a clause of an underwriting arrangement that allows the underwriter the opportunity to offer more securities to buyers than the issuer had initially expected if the demand continues to be especially high.
What is Coinbase?
Created in 2012, the cryptocurrency platform enables users to acquire and swap decentralized tokens such as bitcoin and ethereum. As a private corporation, the organization has received over $540 million in capital.
Established in San Francisco, California, United States, Coinbase is a digital currency exchange. Bitcoin, Bitcoin Gold, Ethereum, Ethereum Classic, Litecoin, Tezos, and several other cryptocurrencies are brokered by them, with fiat currencies in around 32 nations, and bitcoin purchases and storage in 190 countries across the globe.
Brian Armstrong and Fred Ehrsam founded Coinbase, and by market volume, it is reportedly the largest cryptocurrency exchange in the United States.
