A day before its IPO on April 14, cryptocurrency exchange Coinbase Global’s reference price was US$250 ($333.97), valuing the company at a market capitalisation of US$65.3 billion. Fund managers and investors expect Coinbase to be valued (eventually) at US$100 billion. As it turns out, this benchmark was exceeded temporarily. On listing, Coinbase’s trading was volatile, rising to US$381 per share on opening, but closing at US$328.28 after climbing to a high of US$429.54. The closing price values the company at US$86 billion.

Kyle Guske II, an analyst at equity research outfit New Constructs, said: “Coinbase’s expected valuation of US$100 billion implies that its revenue will be 1.5 times the combined 2020 revenues of two of the most established exchanges in the marketplace, Nasdaq and Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange. Our calculations suggest Coinbase’s valuation should be closer to US$18.9 billion — an 81% decrease from the US$100 billion expected valuation”.

In its S-1 (the initial registration document required by the US Securities and Exchange Commission for an IPO), Coinbase notes that “crypto has the potential to be as revolutionary and widely adopted as the internet”. While such a statement can lead to lofty valuations based on a “growth story”, the reality is the cryptocurrency market remains far from “mainstream”.

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