![]() In recent months there’s been plenty of discussion about the so-called “IPO pop,” where a stock skyrockets from its IPO price (the price at which institutional investors bought shares before it began trading for the general public). Instead of having a bank underwrite the listing and drum up buyers for the shares at an IPO price (which is set by the banks), the company is opening up their shares directly to the public instead. In a direct listing, the company isn’t issuing any new shares or raising any extra capital in its debut, and it forgoes an underwriter (along with the fees and roadshow tied to the IPO process). ![]() You may remember direct listings from big debuts like Spotify, Slack, and Palantir in 2018, 2019, and 2020, respectively, and more recently from a handful of unicorns that have elected to go public via direct listing. ![]() But since the company is sidestepping a traditional IPO, what can investors actually expect from Coinbase’s post-debut trading action? How does a direct listing work? With the confluence of a roaring stock market, a crypto market that’s hitting all-time highs, and Coinbase’s healthy balance sheet itself, “This is a great time to become public,” argues Reena Aggarwal, professor of finance and director of the Georgetown Center for Financial Markets and Policy. ![]() The crypto marketplace, which some estimate could fetch an astonishing $100 billion valuation (though based on Coinbase’s reference price, its valuation may be more in the $65 billion range), is set to begin trading on Wednesday, but via a less-common process: the direct listing. Mega cryptocurrency exchange Coinbase is about to launch one of the most highly-anticipated public offerings of 2021 so far. ![]()
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