The CEO of Kraken says the crypto exchange is considering a traditional IPO following rival Coinbase’s volatile direct listing

Jesse Powell
Jesse Powell is the chief executive and co-founder of crypto exchange Kraken.

  • Kraken CEO Jesse Powell said he is considering an IPO when his company goes public instead of a direct listing, Fortune reported.
  • Powell’s thinking was influenced by Coinbase’s volatile direct listing in April.
  • The CEO ruled out going public via SPAC, saying his company is “too big” for it already.
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Kraken founder and CEO Jesse Powell said he is considering a traditional initial public offering to take the cryptocurrency exchange public instead of a direct listing following Coinbase’s volatile performance.

“An IPO is looking a little more attractive in light of the direct listing’s performance,” Powell told Fortune. “I would say we’re looking at it more seriously now having the benefit of seeing how the direct public offering played out for Coinbase.”

Coinbase, the largest cryptocurrency exchange in the US, went public on April 14 in what many viewed as a milestone from the digital asset ecosystem. The company was valued at $68 billion ahead of its direct listing but now hovers around a market cap of $58 billion.

Powell pinned the volatility of Coinbase’s performance to the method it used to go public, especially since existing shareholders are not prohibited from selling their shares at the debut in direct listings.

Unlike in an IPO, companies that go public via direct listing do not issue new shares.

Following a record for Kraken’s bitcoin trading volume in the first quarter of 2021, Powell had floated the idea of following Coinbase’s direct listing route.

The Kraken boss told Fortune that he is still optimistic his company can go public next year.

“Hopefully we’ll have more analyst coverage out, and there’s just more of a track record of growth for the industry that people feel like they can rely on,” he said.

While mulling over how best to take Kraken public, Powell said that a merger with a blank-check company was not an option.

“It might have been possible a few years ago, but today, I think we’re too big to consider doing a SPAC,” he said.

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Coinbase is officially worth more than GM, FedEx, and Twitter after its market debut

brian armstrong coinbase
Coinbase CEO Brian Armstrong.

  • Coinbase’s market value peaked at $112 billion during its first day of trading.
  • The crypto exchange was valued higher than Target or Airbnb at that point.
  • Coinbase is still worth more than General Motors, Twitter, or Chipotle.
  • See more stories on Insider’s business page.

Coinbase‘s market capitalization soared as high as $112 billion during its trading debut on Wednesday, valuing the business more highly than some of America’s biggest and best-known companies.

At its intraday peak, the 9-year-old cryptocurrency exchange was briefly worth more than Lockheed Martin ($108 billion), Airbnb ($106 billion), or Target ($103 billion). Even after paring its gains and ending the day with a $86 billion market cap, it beat out General Motors ($84 billion), FedEx ($76 billion), and Twitter ($56 billion).

Moreover, Coinbase is currently worth more than twice as much as Chipotle ($43 billion), eBay ($43 billion), Hilton ($35 billion), or Electronic Arts ($41 billion).

Coinbase’s market value is notable because it generated only $322 million of net income in 2020, a fraction of Lockheed’s $6.9 billion or GM’s $6.4 billion in profits last year. However, its backers are betting it will grow into its valuation by cashing in on the crypto boom and expanding its operations.

The company is certainly growing quickly. It earned up to $800 million in net income in the first quarter alone, or more than double its profits for the whole of last year. The group also reported 6.1 million monthly transacting users and $335 billion of trading volume in the period.

Coinbase went public on the Nasdaq index via a direct listing, making it the biggest company yet to take that route to market. Direct listings spare companies from issuing new shares and diluting their investors. They also allow existing shareholders to cash in their stock and avoid the usual six-month lockup period.

Read more: Bitcoin is a headache to store, and that’s created an investment opportunity that could theoretically pay determined traders big risk-free returns by December

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Coinbase climbs 13% in trading debut as valuation hovers around $100 billion

Coinbase CEO Brian Armstrong
Coinbase CEO Brian Armstrong

Shares of Coinbase climbed as much as 13% on Wednesday in its hotly anticipated trading debut on the Nasdaq.

The direct listing had a $250-per-share reference price, and opened at $381 before hitting an intraday high of $429.54, which was 13% above its opening price.

The $381-per-share opening price put Coinbase’s valuation at $99.5 billion, giving it a bigger market capitalization than such established US companies as General Motors, FedEx, and Gilead Sciences.

Coinbase is the first major cryptocurrency exchange to go public, and investors see its direct listing as a major milestone for bringing cryptocurrencies in the mainstream. Bitcoin hovered near an all-time high above $63,000 when trading commenced, having hit a record of $64,869.77 earlier in the day.

“We look at the Coinbase listing as an additional validation of the space, and a major PR opportunity for the entire industry to shine as the future of finance,” said Alex Mashinsky, CEO and co-founder of Celsius, a cryptocurrency yield-earning platform.

He added: “Coinbase has more users and more revenues than many of the largest Wall Street players and is more profitable than any major exchange, this validation puts most skeptics at a crossroads having to re-evaluate their denial and frustration with the disruption coming at them from all sides.”

Read more: Bitcoin is a headache to store, and that’s created an investment opportunity that could theoretically pay determined traders big risk-free returns by December

Coinbase’s direct listing comes on the heels of its blowout first quarter earnings. The cryptocurrency exchange and brokerage revealed first quarter revenue grew 840% year-over-year to $1.8 billion, compared to the $1.3 billion for all of 2020.

The results led DA Davidson analyst Gil Luria to up his price target for COIN to $440 from $195 .Though other analysts caution that Coinbase has hefty competition.

David Trainer, New Constructs CEO, said in a stock research note that Coinbase’s $100 billion expected valuation implies that Coinbase will become the largest exchange in the world by revenue, which isn’t guaranteed given the existence of competitors like Gemini, Kraken, and Binance.

In the earnings report, the company warned that its financial results have fluctuated drastically on swings in crypto trading volume-something investors should keep an eye on, Trainer said.

“Trading volume, and therefore transaction revenue currently fluctuate, potentially materially, with Bitcoin price and crypto asset volatility. This revenue unpredictability, in turn, impacts our profitability on a quarter-to-quarter basis,” Coinbase acknowledged in its prospectus.

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Coinbase rival Kraken could go public next year after a surge in bitcoin trading volumes

Screenshot 2021 04 09 at 09.37.54
Kraken co-founder and CEO, Jesse Powell.


Kraken is considering a stock market listing next year after the crypto exchange saw record bitcoin trading volume in the first quarter of 2021, CNBC reported on Thursday.

“We’re looking at being able to go public sometime next year,” Kraken CEO Jesse Powell told CNBC. “It would probably be a direct listing, similar to Coinbase.”

Kraken saw a massive boost from bitcoin hitting an all-time high of $61,725 in mid-March, Powell said, as a number of institutional investors piled into the space. He said any volatility is good for the company, but is even better when prices are going upwards.

Four times as many users signed up to Kraken in the first quarter than did in the second half of 2020, according to CNBC. Spot transaction volumes hit a record $160 billion in the same timeframe, or about 1.5 times higher than last year.

“The first quarter just completely blew away the entirety of last year,” Powell said, adding that the company beat last year’s numbers by the end of February and the whole market “really just exploded.” The total value of the cryptocurrency market exceeded $2 trillion this week after doubling in just two months.

Kraken is currently in talks with investors about another round of fundraising that could give it a valuation of $20 billion. The CEO said this is being delayed in order to evaluate how Coinbase’s IPO performs. But they aren’t in a rush to raise capital.

US rival Coinbase is set to go public on the Nasdaq next week at an expected valuation of $100 billion. The exchange reported preliminary revenues of about $1.8 billion for the first quarter and said it has 56 million verified users.

Companies that choose to go public via direct listings, like Spotify did in 2018, avoid paying hefty fees to investment banks that otherwise act as underwriters in a traditional IPO.

Instead, employees and investors convert their shares into stock that gets listed on a stock exchange. These can then be publicly purchased. Investors can then cash out without having to consider the lock-up period – the length of time after a traditional IPO during which shares cannot be sold by insiders.

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Coinbase plans direct listing in 2 weeks as largest crypto exchange in the US looks to go public

coinbase office headquarters san francisco
The Coinbase headquarters in San Francisco.

Coinbase Global, the largest cryptocurrency exchange in the US, is looking to make its Nasdaq debut on April 14, having pushed it back from its initial March target date, the company confirmed today.

The San Francisco-based company will disclose details, including its reference price, the day before it goes public, Bloomberg was first to report. This timing could still change, however, sources told Bloomberg.

The planned debut is still being reviewed by the US Securities and Exchange Commission. If approved by the agency, the listing would mark a significant milestone for the digital currency ecosystem, which has struggled to earn the confidence of more conservative regulators and investors.

Coinbase revealed a higher valuation of $68 billion in March due in large part to recent private transactions ahead of its direct listing, Reuters first reported.

The increased figure signifies how much the company’s value has surged alongside the huge rally in the price of bitcoin, which hit record highs in March.

Coinbase, founded in 2012, said it planned to go public via direct listing since it does not need to raise new capital for now.

The company, which has more than 43 million users in over 100 countries, would also represent the first major direct listing on the Nasdaq.

Read the original article on Business Insider

Coinbase plans direct listing in 2 weeks as largest crypto exchange in the US looks to go public, report says

coinbase office headquarters san francisco
The Coinbase headquarters in San Francisco.

Coinbase Global, the largest cryptocurrency exchange in the US, is looking to make its Nasdaq debut on April 14, having pushed it back from its initial March target date, Bloomberg first reported.

The San Francisco-based company will disclose details, including its reference price, the day before it goes public, sources told Bloomberg. This timing could still change, however, sources also said.

The planned debut is still being reviewed by the US Securities and Exchange Commission. If approved by the agency, the listing would mark a significant milestone for the digital currency ecosystem, which has struggled to earn the confidence of more conservative regulators and investors.

Coinbase revealed a higher valuation of $68 billion in March due in large part to recent private transactions ahead of its direct listing, Reuters first reported.

The increased figure signifies how much the company’s value has surged alongside the huge rally in the price of bitcoin, which hit record highs in March.

Coinbase, founded in 2012, said it planned to go public via direct listing since it does not need to raise new capital for now.

The company, which has more than 43 million users in over 100 countries, would also represent the first major direct listing on the Nasdaq.

Read the original article on Business Insider