754 Interactions, 2 today
Retail parties can exchange Coinbase stock price activity on FTX in addition to purchasing Coinbase stock as it lists, but only if they are located in the United States.
According to recent information, cryptocurrency exchange Coinbase plans to go public via direct listing on April 14. This means the Coinbase stock will be traded on the Nasdaq, taking another aspect of the crypto space into conventional finance.
However, in the conventional finance sector, there may be confusion. Companies, licenced investors, and other institutions all deal in different ways with stocks and investment, but what about ordinary market participants? How does a market trader go about purchasing Coinbase stock as it goes public on the Nasdaq, even before it goes public?
“With a direct listing, no retail brokerage firms have any role in that listing before it’s available on an exchange,” a spokesperson for financial service provider Fidelity told Cointelegraph. “The first time any retail investor has access to a stock that comes on an exchange through a direct listing is when it’s available to everyone, just like existing stocks, such as AAPL, FB and MSFT.”
Since its inception in 2012, Coinbase has expanded significantly. Coinbase had a $8 billion estimate in 2018 after raising $300 million in a fundraising round. Coinbase’s sales totalled $1.8 billion in the first quarter of 2021, a record high for the firm.
Coinbase is conducting a direct listing, not an IPO
While both act as outlets for businesses to go public, direct listings vary from initial public offerings in a variety of main ways, including underwriter participation. Initial public offerings involve underwriters, while direct listings do not. “An underwriter is any party that evaluates and assumes another party’s risk for a fee,” Investopedia explains, adding:
“The fee paid to an underwriter often takes the form of a commission, premium, spread, or interest. Underwriters play a critical role in many industries in the financial world, including the mortgage industry, insurance industry, equity markets, and some common types of debt security trading.”
Coinbase filed with the US Securities and Exchange Commission to go public near the end of 2020. The firm had expected to launch its direct listing in March, but the exchange moved it back to April after collecting and settling a $6.5 million penalty from the US Commodity Futures Trading Commission. The fine was imposed in response to the government agency’s allegations that Coinbase did not properly disclose trade volume. The fine also stated that a worker tampered with exchange volume numbers by “self-trading.”
Trading Coinbase stock price action on FTX before listing day
According to an FTX details paper, prior to Coinbase’s stock listing, interested parties may trade Coinbase futures contracts on the crypto derivatives market FTX. The exchange launched the token-settled product in December 2020. “Coinbase (CBSE) is a pre-IPO contract,” FTX says on the trading page for the product, adding:
“It tracks Coinbase’s market cap divided by 250,000,000. CBSE balances will convert into the equivalent amount of Coinbase Fractional Stock tokens at the end of Coinbase’s first public trading day. In the event that Coinbase does not publicly list by June 1, 2022, CBSE balances will cash-expire to $32, in line with an 8 billion dollar valuation.”
On FTX, tokenized stocks reflect ownership of the underlying stocks. FTX says in a support article on its website, using its tokenized Tesla trading product as an example: “These spot tokens are backed by shares of Tesla stock custodied by CM-Equity. They can be redeemed with CM-Equity for the underlying shares if desired.”
Tokenized stocks on FTX, as well as CBSE pre-IPO contracts, are the result of a partnership between FTX and financial services firm CM-Equity AG. FTX, on the other hand, is not available to consumers in many countries, such as the United States.
How to get the lowest price for Coinbase stock?
“‘Lowest price is relative to an investor’s trading strategy,” the Fidelity spokesperson said, adding: “Once a Fidelity customer decides what is a fair value for any stock, they can set a price alert for when the stock may hit their target price, they can set a limit order, or they can leg-in to the position over a regular schedule — e.g., $50/month — never more convenient since we offer fractional shares and $0 online commissions.”
Coinbase has also sold a portion of its stock. It was announced in March that private auction sales took place, with the price per share allegedly ranging from $350 to $375. According to estimates, Coinbase is worth $100 billion. Later in March, it was revealed that the firm had registered 114,850,769 Coinbase shares. The shares are classified as Class A common stock.