Many people had really high hopes for the IPO of Coinbase. Actually, according to some, this was supposed to be the greatest IPO ever. And the story could have been different, should bitcoin have shot up. But it did not. Maybe then, Coinbase’s IPO would have been the biggest of all time. But it wasn’t. Interestingly, Airbnb is still the leader, which is kind of surprising, if you think that they debuted in the middle of the pandemic. They really are before Facebook and Uber, while both of those companies had a higher market cap than Coinbase.
Actually, Airbnb’s shares had an original price of $68 and on the first day, they rose to $144.71. The company reached a market cap of $86.5 billion, which is a value almost doubling the estimations from just a day before. Is there a reason, why Coinbase was not so successful?
Why do some companies succeed on their debuts, and some do not?
The tech firms’ IPOs are always highly anticipated events. For early investors, they are (in most cases) the promise for really generous rewards. But we know the cases, where it wasn’t so. Let’s look at Facebook. They debuted in 2012 with a $50 billion valuation, but in a couple of months after their IPO, the valuation more than halved.
Another firm that didn’t really succeed on its debut was Uber (they were unprofitable). Their estimated valuation was more than $76 billion, but their first day closed with $69.7. This is still a success, but the company executives had a reason to be disappointed.
Coinbase’s CEO Brian Armstrong sold almost $300 million in shares of his company on the debut day. And so did his coworkers. But they all had substantial bitcoin amounts and were hoping to recap all the potential losses rather quickly.
If you want to find out about the profitability criteria when it comes to IPOs, the experts’ take on the topic, and finally, the comprehensive case study of Coinbase’s debut, visit the piece published on Disruption Banking and written by Andy Samu: https://disruptionbanking.com/2021/04/20/the-dismal-debut-ipo-of-coinbase/.