Is Coinbase’s mild direct listing performance making emerging crypto platforms thinking twice about going public? The latest comments from major cryptocurrency exchange Kraken may suggest so.
In an interview with CNBC earlier this year, Kraken CEO Jesse Powell shared that the company was considering going public via direct listing in 2022. Coinbase went public less than a month later, and now months after its Wall Street debut, Powell and company may have second thoughts.
IPO… I don’t know
When is Kraken a Top 3 Exchange? ranked by volume, and keeps on increasing. However, the future of Kraken is still a question mark when it comes to public listings. In a recent appearance on Fortune’s video series “Balancing the Ledger,” Powell said the firm was taking a hard look at going public, especially when it comes to direct listings.
“An IPO looks a bit more attractive in light of the performance of the direct listing,” Powell said. “I would say we are looking at this more seriously, now has the benefit of seeing how the direct public offering plays out for Coinbase”.
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Coinbase Struggle Since Direct Listing
In just a few months, Coinbase has cut its initial valuation by almost a third, going public to over $68B, currently just shy of $48B. The company is nearly ten years deep in operation, and undoubtedly still feels strong about its long-term successes. Additionally, the company is leading the way for other crypto-focused businesses to follow suit. However, the direct listing approach for the firm appears to caution investors, and to Powell’s point, considering going public could be a “look and learn” experience for some of the largest public-facing crypto firms.
Since going public via direct listing in April, it's been a steady slide for Coinbase. | Source: $COIN-NASDAQ on TradingView.com
Can Kraken Crack the Code?
Despite the struggles seen from Coinbase shares, bolstered by the start of a less-than-stellar earnings report, CEO Brian Armstrong saw the direct listing route as appropriate. Armstrong told CNBC in April that the direct listing was “more true to the ethos of the cryptocurrency.”
Kraken Powell doesn’t see it that way at all. “I think [Wall Street] Powell said in his recent appearance, “tied by a legacy way of doing things”. However, Powell is by no means committed when it comes to direct listing versus IPO – but he does rule out a ‘hot’ public route: SPACs, or special purpose acquisition companies. SPAC is a growing topic and rumor-mill for emerging companies, such as crypto start-up circles.
It remains to be seen what approach Kraken and other emerging crypto firms will take, but rest assured they are paying close attention to the market forces at work.
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Featured image from Pixabay, Charts from TradingView.com