San Francisco-based cryptocurrency exchange Coinbase recently announced that the company plans to go public directly, rather than following the route of an initial public offering (IPO). The decision means that Coinbase can circulate its stock on the exchange without having to hire a financial institution to provide guarantees for the settlement.
Coinbase skips the IPO process and strives for a direct listing
Not long ago, people familiar with the matter received a reminder that trading giant Coinbase plans to sell shares privately before the IPO. In mid-December, Coinbase disclosed a confidential S-1 IPO document to the US Securities and Exchange Commission.
However, on January 28, 2021, Coinbase announced a proposed direct listing instead of the originally planned IPO. For example, there were rumors a few weeks ago that Goldman Sachs would become the underwriter of the exchange.
Coinbase wrote on Thursday:
Coinbase Global, Inc. today announced its intention to become a listed company based on its proposed direct issuance of Class A ordinary shares. It is expected that the proposed listing will be based on the US Securities and Exchange Commission (SEC) registration statement on Form S-1.
Cryptocurrency supporters see strong market demand for Coinbase stock
Of course, the crypto community began to think about why Coinbase decided to go public instead of IPO. James Todaro, MD, partner at Greymatter Capital, explained some of the reasons he believes Coinbase chose this path.
“The possible key reason,” Todaro Tweet. “Strong market demand/liquidity can be generated without any help, [and] Early investors are not restricted (you can sell stocks immediately). I think early investors will see the market thriving,” Todaro added.
Moreover, direct listing now seems to be a popular way for some companies rather than IPOs. Roblox, the popular video game company, chose to go public, while several others chose to make their debut on the open market.
Coinbase will be able to skip various components of the IPO through outstanding shares without any intermediaries. The San Francisco-based crypto company can sell shares directly to the public without having to deal with marketing new equity and investment bank underwriting transactions.
What do you think of Coinbase choosing to go public instead of IPO? Let us know your thoughts on this topic in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for reference only. It is not a direct offer or solicitation of an offer, nor is it a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. The company or the author is not directly or indirectly responsible for any damage or loss caused or allegedly caused by the use or reliance on any content, goods or services mentioned in this article or related thereto.