Coinbase, arguably the largest cryptocurrency exchange, went public today as its stock was traded on the NYSE for the first time under the ticker symbol “COIN”.
Coinbase did things a little differently than most companies that go public. Specifically, Coinbase did not have a traditional “IPO” event.
In an IPO, a company issues new stock and sells it to new investors, raising a cash for the newly public company, but paying a hefty fee to Wall Street to be the middle man.
Instead, Coinbase went public with a Direct Public Offering (DPO), which basically just allows the existing investors and Coinbase themselves to trade their shares directly with the market.
Fun fact: Ben & Jerry’s was the first company to DPO in 1984. From Investopedia:
One of the earliest notable DPOs was in 1984 by Ben Cohen and Jerry Greenfield, two entrepreneurs who needed funds for their ice cream business. They advertised their ownership stakes through local newspapers for $10.50 per share with a minimum number of 12 shares per investor. Their loyal fan base in Vermont took advantage of the offer and the company, Ben & Jerry’s Ice Cream, raised $750,000 within the year.
Coinbase’s yearly revenue is about $8 billion dollars, while it takes about $3 billion in profit. The revenue comes in through fees of cryptocurrency exchanges so their business will basically rise and fall directly with the overall value of the cryptocurrency market.
CEO Brian Armstrong reflected a bit on building Coinbase. This dude is a powerhouse.