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Coinbase ‘IPO’ Isn’t an IPO. Here’s Why That’s Important

Coinbase ‘IPO’ Isn’t an IPO. Here’s Why That’s Important



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  1. One important feature of Coinbase’s listing is that it is not an initial public offering (IPO), although many media publications have mistakenly described it as such. Coinbase has chosen to come to market via a direct listing, a relatively new option for companies wishing to go public, and one that is curiously suited to a crypto company. But the differences between direct listings and IPOs are material and are causing some confusion in the market.

    So, in the interests of clarifying what the direct listing choice means for Coinbase, here we look at the main differences and how they may affect the initial price movement as well as the company’s equity strategy going forward.

    IPO shares get allocated at a pre-established price; direct listing shares do not. In an IPO, investment bankers set the share price as high as they think the market will bear, since they usually get paid a percentage (typically as much as 7%) of the total amount raised. They base this figure on tentative expressions of interest from institutional investors

  2. tldr; Coinbase has chosen to come to market via a direct listing, a relatively new option for companies wishing to go public. In an IPO, investment bankers set the share price as high as they think the market will bear, since they usually get paid a percentage (typically as much as 7%) of the total amount raised. A direct listing does not have a lockup, as it is based on shareholders selling their holdings.

    *This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.*

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