Coinbase shares struggle on NASDAQ. What went wrong?

Tokenize the Wolrd Episode 7 - Host Angie Lau talks with CEO of Fusang Henry Chong on Coinbase and it's choosing to list on the NASDAQ.

March 8, 2022
March 8, 2022
min read

Coinbase is a huge name among crypto exchanges, but when it comes to going for an IPO last April, it went old school, choosing to list on the NASDAQ. But its stock price took a dive in January 2022, and it remains below its IPO reference price of USD 250.

Coinbase shares struggle on NASDAQ. What went wrong?

I think they listed in the wrong place.

Coinbase's mission has always been to make it as easy as possible to buy Bitcoin, and they have got tens of millions of users who want to interact with digital assets, blockchain-based tokens, using their mobile app. That's why the company is worth so many billions in the first place and why everyone was so excited about finally being able to invest into the company. But then they listed on NASDAQ, a very traditional exchange where investors have to open a traditional brokerage account to go buy those shares. They can't do it through Coinbase. Isn’t it a very jarring customer experience?

If Coinbase could have opened up their shares, either directly through their exchange, or maybe through exchanges like Fusang and allow their own user base to not only buy those tokens directly but buy it in a digital format with blockchain-based tokens, they might worth double.

These days in the 21st century, the platform is your audience, and that really kind of ties into the valuation models in traditional capital markets that really relies on historical earnings as well. The digital marketplace is dependent on future valuations, not even the future expectation of what the value of those shares are.

Do you think that this is creating a potential mismatch in capital allocation?

I think that the real issue is that crypto markets, ICOs, utility tokens, have been forced to find ‘‘alternative value drivers’’. They can't point to an underlying equity value or value from being a real security, so the only value that they can create is by capturing a network effect, by capturing the value of a platform.

What role do you give Special Purpose Acquisition Companies aka SPACs?

The SPAC trend that we're seeing in traditional capital markets just goes to show that retail investors are hungry for exciting investments, both SPACS and ICOs, and willing to invest off a white paper, without really knowing what they are buying into, because they are somehow cut out of the juiciest parts of traditional markets and desperate to get access to investments that they couldn't have access before.

A lot of people say they can't issue real securities because of regulation or legal reasons, but this is nonsense. You can issue tokens based on real equity, and you can do it today with Fusang.

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