Coinbase is the latest mega-startup that may approach the public markets. The digital currency exchange company could follow Palantir, which is also nearing its IPO, after the secretive data-focused unicorn announced that it had filed privately.
Earlier today Reuters reported that Coinbase, a popular American-based cryptocurrency trading platform, could pursue a public debut later this year, or early next year. Plans remain fluid, according to the report, which went on to say that the crypto-focused fintech company “has been in talks to hire investment banks and law firms.”
Coinbase declined to comment, telling TechCrunch in an email that it cannot “comment on rumors or speculation.”
Even more, Reuters reported that Coinbase may pursue a direct listing for its shares, instead of a more traditional initial public offering. A direct listing allows a company to begin to trade publicly without formally pricing its equity through a bloc sale as happens in initial public offerings. Direct listings have become more popular as a concept in recent years as private companies became less dependent on IPOs as a fundraising mechanism, and some of Silicon Valley’s elite became disenchanted with what they consider to be regular underpricing of IPOs, forcing companies going public to leave tens, or hundreds of millions of dollars on the table.
Coinbase is perhaps archetypal for the sort of company that might consider a direct listing. It’s wealthy, having raised north of $500 million during its life as a private company, and highly valued. Coinbase’s most recent private financing of $300 million valued it at $8.0 billion, according to Crunchbase data. A high valuation and the possibility of ample cash reserves are what previous direct listings Slack, and Spotify had as well.
Most companies still tack towards the public markets through IPOs, as we’ve see in recent weeks with the traditional debuts of Accolade, Vroom, and others. Yesterday TechCrunch covered initial price ranges for two more IPOs, GoHealth and nCino, each of which have eschewed the direct listing model in favor of raising funds during their exit from the private markets.
How big Coinbase is today is not clear. The company’s financial history is occluded — common with private companies — and a bit uneven. Media reports have pegged its 2017 revenue at around $1 billion, boosted by that year’s crypto-mania. Precisely how Coinbase performed in 2018 is less clear, though other media reports paint the picture of a smaller company.
Regardless of whether Coinbase direct lists or takes on a traditional IPO, we’ll get to see its S-1 filing. That document will provide good insight into the company’s historical financial performance, allowing us to see how Coinbase fared during various crypto-booms and busts.
With public markets at all-time highs and valuations for tech stocks far above historical norms, it’s not surprising that some highly-valued unicorns are gearing up for a run on the public markets. Let’s see how many pull it off.