Here's why Coinbase is going public without an IPO. How does DPO work?
Mega cryptocurrency exchange $Coinbase (COIN.US)$ is about to launch one of the most highly-anticipated public offerings of 2021 so far.
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 tonight, but via a less-common process: the direct listing.
How does a direct listing work?
You may remember direct listings from big debuts like $Spotify Technology (SPOT.US)$, $Slack Technologies Inc (WORK.US)$, and $Palantir (PLTR.US)$in 2018, 2019, and 2020, respectively, and more recently from a handful of unicorns that have elected to go public via direct listing.
Direct Listing, also called Direct Public Offering (DPO), is the way companies sell shares to the public directly, in which no new shares are created and only existing, outstanding shares are sold with no underwriters involved.
With traditional IPOs, companies need the services of intermediaries called underwriters, who facilitate the IPO process and charge a commission for their work. But with DPOs, companies can get rid of the help of these intermediaries in the process.
Thus, for those who can't afford underwriters, don't want share dilution, or are avoiding lockup periods, DPOs are often better choices.
Big change of stock listing in history
On December 22, 2020, the U.S. Securities and Exchange Commission announced that it will allow companies to raise capital through direct listings, paving the way for circumvention of the traditional initial public offering (IPO) process.
Why would a company like Coinbase choose a DPO instead of an IPO? Let’s consider the differences.
Pros and Cons of DPO
Dear fellow investors, which listing method would you choose if you were Coinbase CEO?
How much do you think the opening price will be after Coinbase's debut?
We welcome your comments!![]()
$Nasdaq Composite Index (.IXIC.US)$ $Dow Jones Industrial Average (.DJI.US)$ $S&P 500 Index (.SPX.US)$
How much do you think the opening price will be after Coinbase's debut?
We welcome your comments!
$Nasdaq Composite Index (.IXIC.US)$ $Dow Jones Industrial Average (.DJI.US)$ $S&P 500 Index (.SPX.US)$
Source: Fortune, Investopedia
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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OldNormanBates : How's About That Checkbook and a 5000 Written Down Number For The Open!
Gandamu : good for coinbase. they can fck themselves, i ain’t buying that over price piece of sh!t
Dermot Nally : I think $2.00 per share is good to start , but if they were to list dogecoin on coinbase like they should. then. I might pay $7.00 per share
71240579 : could be very profitable in these early stages of crypto. secure and easy to use. maybe worth the price in the long run
Investing with moomoo OP 71240579 : Well in long term, one risk of its high valuation is also noteworthy: competition is only getting more intense, with Square and other trading platforms potentially eating into market share![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
71240579 Investing with moomoo OP : sometimes people choose more established and secure reputable platforms
Investing with moomoo OP 71240579 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
yeah I’m so curious how far it could go above NASDAQ’s reference
71240579 Investing with moomoo OP : bitcoin has outperformed even most stocks. I hesitated on that to my regret. as you know any investment is risky but I'm just trying to jump on at this point.
Investing with moomoo OP Dermot Nally : Haha bad news is trading probably starts at $250![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
And more $ is gonna rush into market after its listing
Investing with moomoo OP 71240579 : Cryptos are good ways to balance portfolio![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
If you are talking about Coinbase, be careful about the first-day volatility.
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