Should You Invest in The Coinbase Stock When It’s Available?
The Coinbase stock is almost here. Many crypto fans see it as yet another example of the digital currency becoming increasingly legitimized. But does that make it a worthwhile investment? Well, that depends…
Initial public offerings (IPOs) have had a heck of a run of late. And as Andy Snyder – the Founder of Manward Press – predicted, 2021 is proving to be the year of crypto. Bitcoin’s value has about doubled. And the second-largest crypto, Ethereum, has done even better. Meanwhile, some altcoins have seen even wilder upsurges in value.
All of this exuberance has led to some big events in the crypto space. Morgan Stanley started offering crypto access to its wealthy clients that were suffering from FOMO. The Treasury Department is working on a digital dollar of its own. And PayPal has started allowing its customers to use cryptocurrencies like actual currency. So it seems only natural that the world’s most popular digital exchange is finally hitting Wall Street. The exchange will IPO via a direct listing soon.
This brings us to an important question: Why? Wouldn’t it make more sense for the Coinbase stock to simply be traded on its own exchange?
Well, as Andy Snyder puts it, there are a couple of good reasons…
The first is due to regulations. In a statement, Coinbase said that this is uncharted territory. And the SEC isn’t sure how to handle an exchange that wants to list itself on itself. While that makes some sense, it’s also a little ironic for this pioneer operating in a land that eschews regulations.
Another big reason Andy says that Coinbase doesn’t list its stock on its own exchange is technological boundaries. Let’s unpack that one a little more…
Why You Won’t Find Coinbase Stock on Coinbase
Coinbase created a digital exchange out of virtual thin air. And it’s a darn good one at that. You can check out our Coinbase review. If the company wanted to figure out a way to list its own stock, it certainly would have had the technological know-how. But, as Andy pointed out, it would be a pricey endeavor. And quite frankly, the juice probably wouldn’t be worth the squeeze. On top of that, it would keep institutional investors out of the action.
That’s not what early investors are looking for… Releasing the Coinbase stock to the general public is going to give patient investors that backed the company from the beginning a chance to score big.
Coinbase isn’t looking to raise money in order to dominate the market. If it were, it wouldn’t be going about this process with a direct listing. It would follow the traditional IPO process. But this method will give those who backed Coinbase from the start a chance to trade their stake in the company for some cold hard cash.
There’s little doubt that demand is going to be huge when the Coinbase stock is unleashed to the public on April 14. Both institutional and retail investors are licking their chops to get in on the action. That demand is going to send Coinbase shares upward fast. And those early Coinbase backers are going to finally have the chance to make back their money and then some.
But What About Us Regular Investors?
We asked Andy whether he plans to try to get in on the frenzy come the big day. And to our surprise, he’s not too keen on it.
Quick in-and-out traders will surely have a great day. Demand will be huge, and the folks who play it right will win. But if you’re not willing to be glued to your screen for 48 hours or if you’re thinking of buying now and selling later, there are better opportunities.
This was surprising to hear from a self-professed “crypto guy.” But Andy’s convinced this isn’t about crypto. Releasing the Coinbase stock into the wild is about cashing out and appeasing stakeholders.
While there’s nothing wrong with a little greed, Andy’s prediction doesn’t bode well for buy-and-hold investors. Those interested in investing in crypto would be much better off actually investing in crypto.
The Bottom Line on the Coinbase Stock
April 14 has all the markings of what promises to be a wild day. When the Coinbase stock gets paraded onto the Nasdaq under the ticker symbol COIN, it will be drawing a whole lot of attention. But we agree with Andy; there are better and easier investment opportunities out there.
For starters, we’ve got a list of the five best cryptocurrencies to invest in right here. And you can find our favorite cheap cryptocurrencies here. All you need to do is set up a Coinbase account and get started.
And for those looking for up-to-the-minute crypto news, we highly recommend signing up for Andy’s Manward Financial Digest e-letter. All you have to do is enter your email address in the box below to keep up to date on the latest investment opportunities he’s uncovering.
About Matthew Makowski
Matthew Makowski is a senior research analyst and writer at Investment U. He has been studying and writing about the markets for 20 years. Equally comfortable identifying value stocks as he is discounts in the crypto markets, Matthew began mining Bitcoin in 2011 and has since honed his focus on the cryptocurrency markets as a whole. He is a graduate of Rutgers University and lives in Colorado with his dog, Dorito.