Investors always look for the fresh opportunity that will create overflowing wealth. Whenever a respected company announces it is going public, it triggers a frenzy of interest that often leads to huge first days. This is what we saw with IPOs such as Snowflake (NYSE:SNOW) and Airbnb (NASDAQ:ABNB). And those who are allowed to buy IPO shares from underwriters make huge profits. But for the rest of us, we have to pay premiums to get shares.
Multiple companies are going public in 2021, with many already done with the paperwork with the SEC. Companies like delivery platform Instacart, pet company Petco, and mobile investing app Robinhood are gaining a lot of attention coming into 2021.
But there’s one company that is better than all the rest. With its special position in one of the most in-demand industries in the world — cryptocurrency — Coinbase could be the 1 must-own IPO stock for 2021.
Coinbase’s plan to rake it in
Coinbase has one of the top crypto exchanges in the American market. It lets people buy and sell bitcoin, along with a wide range of other tokens, with an easy interface for every-day investors and a more detailed Pro service for advanced investors and traders.
Plus, Coinbase gives cryptocurrency wallets to people wanting to hold their own cryptocurrency. These wallets let Coinbase customers send and receive coins to each other in a secure way, all with a simple interface that streamlines the process.
Not a fan of bitcoin? It doesn’t matter
If you believe the idea that bitcoin is a dangerous investment, then I understand. Lots of intelligent investors have jumped onto the crypto train these past months, but there’s still a big debate going on, and many believe the entire crypto craze is a bubble that will pop soon.
But the truth is: You don’t need to like crypto to invest in Coinbase. Just look at the numbers: The exchange has 35 million users, and records $320 billion in trading volume. Coinbase customers have a total of $25 billion in cryptocurrency on the platform. And even better, Coinbase is a global business, with customers in over 100 countries and more than 1,000 full time employees.
But best of all, Coinbase gets money on every transaction that goes through its system. The company charges about 0.5% on every sale of cryptocurrency. It also charges between $0.99 to $2.99 on purchases of up to $200, plus a 1.49% variable rate on purchases made using a bank account or the company’s own wallet.
A secret IPO
Normally, companies seeking public listing have to disclose tons of information to investors. But Coinbase took advantage of new laws that allow companies to file their IPO statements confidentially. Coinbase tweeted about its SEC submission last month.
While they didn’t speculate on when they would move forward, the company said it expected S-1 registration to become official after the SEC finishes its review process. Its up to Coinbase to choose the exact time, but some investors say they could go public as early as February.
Until Coinbase’s IPO documents are public, we won’t know for sure what Coinbase’s income and profit is like. But we can already see why some are so excited by this IPO:
- Fees on even a very small fraction of $320 billion in cryptocurrency transactions means big money.
- The current explosion in bitcoin has brought in more investors than ever. And they are searching for ways to trade cryptos. Coinbase has made itself the #1 place for beginners to start.
- Their fees are close to companies like Square (NYSE:SQ) and PayPal Holdings (NASDAQ:PYPL).
- Coinbase’s last funding round was in 2018 and the valuation used was $8 billion. That was after bitcoin’s initial bull run, but was after it lost much of its gains.
Watch Coinbase closely
It’s possible the company will go public using a direct listing instead of the currently planned underwritten IPO. If that happens, current shareholders will make more money on the first day explosion, instead of giving it to the financial institutions that do the underwriting.
Regardless of your opinion on bitcoin, Coinbase might be a chance to profit from the new technology without caring what happens to bitcoin prices. This has me keeping a close eye on the company. Especially its upcoming IPO documents when they finally go public.