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Coinbase IPO, Explained – Let’s Break It Down

trading stocks, crypto, coinbase ipo
Kittichai on Deposit Photos

The crypto and Wall Street communities are buzzing about Coinbase, IPOs and direct listings. If you’re like me, you probably need a refresher on IPOs and a complete rundown on Coinbase and direct listings. Let’s break it down.

What is a direct listing?

Before an initial public offering (IPO), a company is private, which means it gets money from venture capitalists, angel investors, friends and family. But when it goes public, anyone can buy shares, and the company’s stock is traded on a stock exchange. But there’s something different about this public offering: It’s not an IPO. Coinbase is going the path less traveled to a direct listing. This means that the company isn’t raising new money; it’s just putting its existing shares onto the stock exchange. Spotify also did this back in 2018. 

Wait, I don’t understand IPOs.

OK, so, a little more background on IPOs. It’s when a private company wants to create new shares and sell them to the public in the form of stocks. Investopedia says the pros of going public include:

  • More money
  • Room to grow
  • Increased credibility
  • Positive shareholders’ equity (the money left over after a company pays off debts and liabilities)

Coinbase is different because it’s not creating new shares. Only existing and outstanding shares are being sold. There’s more to that story, but these are the basics. 

What is Coinbase?

Coinbase is basically an easy place for you to buy and sell cryptocurrency – all kinds. This company attracts investing beginners because they gather all of your trade information into one place. You can manage your portfolio, schedule recurring buys and store your funds in a vault. Also, you can take courses to learn about different cryptocurrencies; once you finish a course, you get coins! Many people – 56 million and climbing – use Coinbase because it makes a potentially confusing task really simple.

Crypto going mainstream

Why does all of this matter? Wedbush analyst Dan Ives said that the Coinbase public offering shows that cryptocurrency is becoming mainstream. It is the third-largest digital asset exchange in the world, right behind Binance and Huobi Global, but some expect to see its popularity skyrocket because of the direct listing!  Its NASDAQ symbol is COIN, so be on the lookout. And follow Bold TV and GenBiz for more explainers on crypto and stocks.

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