Shares of cryptocurrency exchange provider Coinbase opened for trading Wednesday afternoon for the first time ever at $381. After initial enthusiasm and a rush of buyers looking to get in on the hot IPO, the stock lost momentum and closed the day below its IPO price.
From $381 to $429
Coinbase’s first trade on the public market took place shortly after 1 pm ET. Within a few minutes, the stock blew past the $400 per share mark and hit a high of $429.54. But the stock quickly reversed direction and traded lower over the hours that followed.
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Coinbase’s stock bottomed at $310.01 shortly after 3 PM ET but a rush of buyers swept in and drove the price higher. Shares closed Wednesday at $327.87, up 31% on the day.
Despite losing $100 per share off its highs, Coinbase’ss stock is still up sharply from its $250 reference price set by the Nasdaq exchange on Tuesday.
At its peak, Coinbase’s valuation was roughly $100 billion which means it was more valuable than the NYSE at $67 billion and its Nasdaq exchange home that was valued at $26 billion.
Investors are likely to argue that a premium valuation versus the century-old NYSE and decades-old Nasdaq is warranted. Coinbase is among the rare breed of companies that are profitable on day one of their public debuts. Coinbase also charges clients a fee of 0.6% on trades versus the Nasdaq at 0.009% and the NYSE’s parent company ICE that charges 0.011%.
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Two pros debate risks in Coinbase’s stock following IPO debut
Commenting right after the IPO debut, Coindesk TV’s Emily Parker said on CNBC’s “The Exchange” that Coinbase is a “gateway to the mainstream world.” Coinbase, she said, offers its users a very easy-to-use platform that is trusted.
Coinbase might hold a dominant position today in the cryptocurrency universe but this competitive advantage can’t be sustained forever, Parker said. Coinbase will see increased competition not only from financial institutions but exchange traded funds that offer investors an alternative way to invest in cryptocurrencies.
But not all experts agree. CMS Holdings Bobby Cho said on “The Exchange” that Coinbase’s story is much more than just a crypto exchange that boasts a first-mover advantage.
“This is not a story, in my opinion, about where crypto takes Coinbase or where Coinbase takes crypto,” Cho said. “This is the idea of how Coinbase is going to start cross-selling different products you may have gotten from different financial services companies.”