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.”
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.
Bed Bath & Beyond shares were knocked sharply lower Wednesday after first-quarter sales results from the housewares retailer fell short of Wall Street’s target.
The company on Wednesday posted quarterly adjusted earnings of $0.40 per share, higher than the analyst consensus estimate of $0.41 per share from Refinitiv and up from $0.38 per share a year earlier.
Sales for the quarter ended Feb. 29 fell by 16% to $2.62 billion from $3.11 billion a year ago, slightly missing the $2.63 billion that Wall Street had anticipated.
Shares fell as much as 15% to $23.68 in heavy volume before the losses were pared to 10% during the session. The company’s stock has soared over the past year from about $4 each.
Bed Bath & Beyond, which is executing a turnaround plan, said quarterly sales were hurt in part by divestitures and permanent store closures. Bed Bath & Beyond in January sold Cost Plus World Market to private equity firm Kingswood Capital Management and in November completed the sale of Christmas Tree Shops and its institutional Linen Holdings business.
First-quarter comparable store sales decreased 20%, the company said. Total enterprise same-store sales rose by 4% while online sales surged by 86%. The company said its strongest categories during the period included bedding, bath and kitchen food preparation.
The company reaffirmed its fiscal 2021 outlook for net sales of $8 billion to $8.2 billion and its adjusted EBITDA guidance of $500 billion to $525 million.
“As our transformation continues to take hold, we will show up differently for our customers with enhanced omnichannel experiences and modern stores,” among other actions, said Mark Tritton, Bed Bath & Beyond’s president and CEO, in the earnings statement.
New York City real estate titan Kent Swig is backing a new cryptocurrency and has landed at least $6 billion in gold reserves for the venture, according to a Bloomberg report.
Digital token DIGau’s value will be pegged to gold’s market price, guaranteed by liens against mining claims in Nevada and Arizona that were secured by Swig and his partner Stephen Braverman’s company, Dignity Gold.
Swig, 60, said he searched worldwide for gold assets for 18 months to secure the $6 billion of reserves.
“We’re not reinventing the wheel here. What we’re doing is applying the world’s stable backing of a lot of things to a very advanced technology,” Swig told Bloomberg in an interview published Tuesday.
Swig, who owns realty firm Brown Harris Stevens, said his interest in cryptocurrencies was piqued after his teenage son talked to him about the concept. Swig said DIGau will stand out as a gold-backed, U.S.-based crypto security that pays a dividend to token holders.
Piper Sandler’s Craig W. Johnson, CFA, CMT said he believes Lumber prices could “very easily” move above $1,300 per thousand board feet this year even after notching a record high in April.
That figure represents a 12% increase from Tuesday’s closing price of $1,154 per thousand board feet. Lumber prices have soared more than 250% in the past year alone.
In an interview with Insider, Johnson, a technical research market strategist, said that lumber prices have broken out of a “huge consolidation” that occurred from 2018 through 2020 and are set to soar amid the economic reopening.
Based on technical analysis, Johnson sees lumber prices continuing to rise to at least $1,300 over the next six to nine months.
The strategist noted that there is an enormous demand for housing and renovations that’s pushing lumber prices higher.
Johnson said that with interest rates as low as they are, there’s an overall sense that this is the lowest mortgage rate many people are ever going to get.
Johnson also said that timber companies are struggling to catch up with demand after shutting down some of their operations during the pandemic.
The technical research strategist added that, based on what he’s been reading, timber companies won’t be putting more sawmills in place to meet demand either because they lack the economic incentive to add capacity.
Creating more sawmills is a capital-intensive process that requires producers to get permits, and that can’t be done quickly.
Johnson also said the upcoming hurricane season could exacerbate the lumber price issue by adding to demand.
When asked what could stall rising lumber prices, Johnson said that only the slowing of economic activity would cause prices to fall, but noted that right now he believes that’s unlikely as we are in the “great wide open” for economic growth post-pandemic.
Lumber traded up 2.7%, at roughly $1,212, as of 12:04 p.m. ET on Wednesday.
Coinbase is set to make its public trading debut on Wednesday and some market commentators are questioning its lofty valuation. Manhattan Venture Partners, an early backer of the crypto exchange, believes the massive figure is justified.
Santosh Rao, the head of research at the merchant bank, says a $100 billion valuation for Coinbase is “totally reasonable” given the disruptive nature of the crypto firm.
Manhattan Venture Partners was an early investor in Coinbase as well as a number of other big-name tech companies like SpaceX, Palantir, and Draft Kings.
Rao sat down with CNBC on Wednesday to discuss Coinbase’s public debut and his firm’s investments.
The head of research highlighted the fact that based on estimated revenues and earnings for 2022, at a roughly $100 billion valuation, Coinbase will trade at just over 11x sales and 27x EBITDA.
Those figures aren’t outlandish for a company that has demonstrated consistent growth, according to Rao.
Coinbase released impressive first-quarter results on April 6 that showed a 117% quarter-over-quarter increase in monthly transacting users. The company also earned more revenue in the first quarter of 2021 ($1.8 billion) than it did in all of 2020 ($1.3 billion).
The rising revenue came amid a historic run for bitcoin that saw the cryptocurrency rise more than 300% in 2020, and an additional nearly 100% in the first quarter of 2021 alone.
Some market commentators are predicting a further 10%+ breakout moving forward as well.
When asked whether crypto prices need to keep going higher in order for Coinbase to maintain its lofty valuation, Rao said it would help, but argued the company has a range of services on offer to offset any downfall in crypto prices.
“That’s their core business at this point, but they have other services too. And they have a subscription product coming up, a whole range of services, the custody services, they have a number of other levers to pull as they go up,” Rao said.
The head of research added that, in his view, there’s no reason why crypto prices should stop going up as investors are starting to realize the space will become “an integral part of the financial system going forward.”
Rao also noted that of the best features of Coinbase is that it’s “agnostic” towards individual cryptocurrencies, meaning if bitcoin falls and other cryptocurrencies rise, Coinbase will still benefit.
The head of research at Manhattan Venture Partners ended the interview by saying that Coinbase has the breadth, scale, and technology to keep competitors at bay over the long haul.
Coinbase CEO Brian Armstrong said on Wednesday that the company will diversify its revenue stream away from transaction fees over the next five to 10 years.
According to a company filing, 96% of the company’s sales in 2020 came from fees it charged users. He anticipates that will decline to around 50% as new revenue streams like credit cards and staking services grow. Armstrong also said users can expect fee compression over the long term.
“We’ve started to monetize a number of things,” he told CNBC in an interview on Wednesday, detailing a number of examples. “And my guess is that in five or 10 years, you’ll see them being maybe even 50% or more of our revenue.”
Currently, Coinbase is the largest cryptocurrency exchange in the US, and offers a wide variety of products including custodial accounts for institutions, digital wallets for retail investors, as well as its own US dollar stablecoin.
In 2019, the professional platform of Coinbase updated its fee structure by increasing some maker fees as high as 233%, as reported by CoinTelegraph. Coinbase then amassed $1.1 billion in direct revenue following this change in 2020, more than double the $482 million revenue it made in 2019.
Coinbase is going public via direct listing on the Nasdaq on Wednesday, viewed by many cryptocurrency bulls as a milestone for the digital currency ecosystem.
“Coinbase’s listing is for crypto what Google’s IPO was for the internet,” Antoni Trenchev, co-founder and managing partner of Nexo, a regulated financial institution for digital assets with over $12 billion in assets under management, told Insider. “Just over 15 years on, it’s hard to imagine life pre-Google.”
The O’Leary Funds and O’Leary Ventures boss – whose nickname is Mr. Wonderful – also slammed celebrity SPACs, praised Robinhood, and trumpeted NFTs during the conversation with influencer Kevin Paffrath on his YouTube channel, Meet Kevin.
O’Leary also criticized the Biden administration’s plan to hike corporate taxes, and called for the US to take a tougher stance towards China.
Here are O’Leary’s best quotes from the interview, lightly edited and condensed for clarity:
1. “I’m waiting. So far there’s been no correction, but I’ve lived through lots of volatility and I know, just when it seems to be safe, poo poo happens.” – discussing the prospect of a market crash.
2. “GameStop’s brand has way more value today than it had five months ago, before it became part of every headline around the world, day after day. Netflix saw the writing on the wall when they were mailing DVDs to everybody and said, ‘We’re going to digitize this,’ and they had a brand. Maybe GameStop can do the same thing.”
3. “If I was short GameStop stock right now, I’d be worried. I think it’s going to get a second kick at life. This whole social constituency supporting it – the pricing of the stock is kind of irrelevant at this point.”
4. “It’s hilarious if you look at the volatility of Amazon over the last 20 years. You would have never owned it as it’s so volatile, but in the long run it’s created a trillion dollars’ worth of value for shareholders. Same thing is going to happen to these stocks that are going to provide digitization.” – underscoring the growth prospects of Zoom, Shopify, and other stocks that enable remote activities.
5. “It’s not good news for the airlines because even though they’re coming back, it’s all basically vacation tickets. Everybody’s going to Disneyland in a big tube. That’s a very crappy business, they won’t make any money. Over the next two years, probably a couple of them have to go bankrupt.” – underscoring the challenges for airlines if business travel permanently falls by 15% or 20%.
6. “Frankly I’m not a big fan of SPACs. I do have about 20 SPACs in my portfolio right now, but only from operators that I know. A SPAC is no different than private equity, and so I need to know the team that’s backing the SPAC has done deals before, knows how to buy at the right multiple, and knows how to operate. I’m against the idea that some celebrity knows what they’re doing in private equity, it’s a joke. I avoid those like the plague, I think those are going to go to zero.”
7. “I’m a big fan of Robinhood because even though it’s got a lot of criticism, it helps 22 million people learn about stocks. I’m a big believer in learning the ways of the stock market.”
8. “When you get into these complex straddles and collars and all of this stuff with leverage, sometimes you wake up with a hangover after going out to a party, and you forget the position you have on and you just blow yourself up. You’ve got to be careful.”
9. “I’m beyond sanctions, I want to take them right out of the financial system in North America.” – calling for the US to adopt a tougher stance towards China in order to level the playing field.
10. “Elon Musk is a maverick who doesn’t play by the rules, but he’s actually a good example of how this relationship should work. If American companies want to go to China, they shouldn’t have to give up control of their intellectual property to do that.”
11. “If you believe that burning up huge amounts of coal is detrimental and I do, you should stop buying bitcoin from the Chinese. Over time, as institutions start to really get involved in crypto, you’ll have the discounted blood coin from China and you’ll have the premium virgin coin with provenance – no different than blood diamonds.”
12. “NFTs are a derivative of the digital economy. There’s merit, but as a new asset class it’s going to be immensely volatile. The idea that you have something that’s copyrighted in perpetuity and can’t be forged is really interesting and a good idea. At the end of the day they will find their place.”
13. “You’re pouring free money out of the sky from a helicopter into anywhere you can stuff it. But then you’re raising taxes so you’re taking it back right away, before it has a chance to have any effect whatsoever. You can’t suck and blow at the same time, it doesn’t make any sense.” – criticizing the Biden administration’s plan to follow up its stimulus efforts by raising corporate taxes.
14. “The idea that Yellen can run around the world asking for a standard minimum corporate tax is a joke that’s never going to happen.”
15. “I covet downside protection much more than outperformance. I don’t care about beating the indexes at all. I don’t need more money, I need to keep what I’ve got.”
16. “Buying the dip is more rock and roll, but what invariably happens is you go through a massive correction and you learn a very important lesson. The generation that is trading right now has never gone through a sustained correction. It’s coming – I don’t know when, I don’t know what’ll trigger it, but they will learn their lesson. If you have a lot of leverage on, it’s a hell of a lesson because you end up in a negative net-worth position. But you do learn from it.”
17. “Take 10% of your paycheck, put it away, and do not touch it except in emergencies. When you take money and burn it on a vacation, or buy some useless piece of crap you’re never going to use – which many people are guilty of including me – you’ve killed off your future. That money’s not working for you anymore. Do you really need another pair of jeans, another pair of shoes? Just look at your closet of all the crap you don’t wear, that’s all money you wasted.”
18. “If you walk around with an Apple Watch on, that thing is a piece of consumer-electronic junk. I own Apple stock, but I would never be seen dead with an Apple Watch. Not a chance in hell.” – voicing his preference for wearing traditional watches and supporting conventional watchmakers.
A broad rally in cryptocurrencies on Wednesday helped extend Dogecoin’s two-day gains to as much as 94%, according to pricing data from Coinbase.
The surge higher helped push the dog-meme-cryptocurrency’s total market value to as much as $18 billion, based on its current outstanding circulating supply of 129.2 billion dogecoin.
Besides being created as a joke, Dogecoin is unique from other cryptocurrencies in that an unlimited amount of the coin can be mined, meaning the is limitless supply of dogecoin. Alternatively, bitcoin has a fixed supply of 21 million coins, of which nearly 19 million bitcoin have already been mined.
But some are buying into the dog-meme joke, including celebrities like Tesla CEO Elon Musk and Guy Fieri of Diners, Drive-Ins, and Dives, who have both tweeted support for the Shiba-Inu inspired cryptocurrency.
“Rollin’ out to the MOON [rocket emoji] #Dogecoin,” Fieri tweeted on Tuesday, accompanied with a picture of Fieri in an astronaut suit holding a space-suited up Dogecoin mascot.
Corporate executives are using audio-conferencing app Clubhouse to directly communicate with retail investors, according to reporting from the New York Times’ Matt Phillips.
After hosting a post-earnings report conference call with Wall street analysts, executives at CarParts.com turned to Clubhouse to field questions from a group of over 2,000 listeners, the Times reported. Audience members asked questions like: How does the business work? Are CarParts.com shares worth buying?
It’s a move that appears to be an effort to communicate more directly with retail investors and recruit more individual shareholders after decades of mutual funds dominating investor portfolios.
CarParts.com’s chief financial officer and chief operating officer called the Clubhouse session an experiment.
“We’re trying to disrupt the way people fix their cars,” he told the Times.”Is there a way for us to disrupt how retail investors communicate with management?”
Retail investing boomed in 2020 as people stuck inside their homes and fueled with extra stimulus cash turned to commission-free apps like Robinhood during the pandemic. The amount of individual stock ownership also grew to the highest level since 2014. According to the Federal Reserve, American households bought roughly $211 billion in individual stocks last year.
Whether that trend of individual stock ownership will continue could depend on the investor fanbase that companies build, and Clubhouse is one avenue executives are using to get closer to retail investors.
Though a recent note from JPMorgan’s global markets strategy team says that US retail investors are rotating away from buying individual stocks and stock options and towards buying more traditional equity funds, as was the case before the pandemic.
During the first week of April, stock ETFs saw strong inflows of $18 billion, JPMorgan noted. Meanwhile, measures of call option buying that rose to a record high in January have begun to subside over the past two months, a sign that retail investors are less willing to invest in call options on individual stocks. Similarly, JPMorgan found that equity baskets containing stocks popular with US retail trading platforms have also slowed over the past two months.
JPMorgan noted that monitoring retail flows into equity funds will be an important metric for determining the state of the individual stockholder.
Companies with bitcoin exposure jumped on Wednesday in lockstep with the broader cryptocurrency rally ahead of the highly anticipated direct listing of Coinbase.
“The Coinbase IPO is being met with excitement that global crypto market cap will grow by at least 50% later this year,” Edward Moya, senior analyst at OANDA, told Insider. “Each legitimate investment vehicle for cryptocurrencies is solidifying the belief that this bubble won’t come crashing down to zero.”
“All four of these have a direct benefit from bitcoin being up,” John Wu, president of Ava Labs, the company beside altcoin Avalanche, told Insider. “Others like PayPal who help facilitate the trading of crypto are up because of sentiment but they don’t actually own bitcoin.”
Wu said the stocks are now trading lower since investors are “buying the hype, selling the fact”. He added that investors may now be allocating ay from these names to the cryptocurrencies themselves.
Coinbase CEO Brian Armstrong on Wednesday during his interview with CNBC made the case as to why the public should invest in his firm rather than straight to the cryptocurrencies.
“We are kind of what you might call an index bet or a levered bet on the crypto space more broadly,” he said.
As for Square, its founder and CEO Jack Dorsey has long been one of the staunchest advocates of bitcoin. In October 2020, Square announced it had purchased 4,709 bitcoins for an aggregate price of $50 million. The San Francisco-based company paid an average price of $10,617 for each bitcoin.
The Coinbase direct listing on the Nasdaq prompted a broader cryptocurrency rally.
“Bitcoin and the other top altcoins are making fresh record highs as large parts of Wall Street are finally drinking the Kool-Aid,” Moya said.
The Coinbase direct listing is viewed by many cryptocurrency advocates as a milestone for the digital ecosystem as it looks to continue to make headway into mainstream financial markets.
“Coinbase is the first crypto company to make mainstream waves and is already valued higher than historic financial institutions like JP Morgan. This, coinciding with crypto’s market cap surpassing 2 trillion, provides the space with much-needed stability that will reassure retail investors,” Ganesh Swami, co-founder and CEO of Covalent, a provider of blockchain data, told Insider.
The stocks were all up during premarket trading but had pared some gains late Wednesday morning. Here’s where the stocks traded as of 10:51 a.m. ET: