Coinbase IPO: how to buy and short Coinbase shares

How to trade Coinbase shares

You’ll be able to trade Coinbase shares with us on the day of the company’s listing. Coinbase shares may take a few hours to be available – as is the case with all brokers for American IPOs.

Trading Coinbase shares with us means that you’ll be taking a speculative position on the company’s share price without owning the shares directly. Instead, you’ll be trading with CFDs, which are leveraged derivatives.

• ‘Buying’ means that you’re taking a position on the Coinbase share price rising – known as going long
• ‘Selling’ means that you’re taking a position on the Coinbase share price falling – known as going short

Since CFDs are leveraged, it’s important that you take steps to manage your risk because leverage can increase both your profits and your losses.

Learn more about the impact of leverage on your trading

We should also note that Coinbase will be ‘opening only’ when it lists – meaning you won’t be able to go short – until there’s a sufficient amount of shares in circulation to facilitate short selling.

How to invest in Coinbase shares

Investing in Coinbase shares is different to trading because when you invest, you’re taking direct ownership of shares rather than just speculating on their price. Investing in Coinbase shares means you’ll profit if you sell your shares for a better price than what you paid to buy them; you’ll incur a loss if you sell your shares for less than this price.

Fees

While trading international shares like Coinbase may open up new opportunities for Australian investors, it’s important to understand how the fees and charges differ from buying ASX listed shares.

Mind you, while trading US shares online incurs $0 commissions, trading over the phone incurs additional fees.

Moreover, while you will not incur a commission fee on US share trades, you will incur foreign exchange fees of 0.7%, on any international trade, from the moment you enter and exit your trade.

Finally, with US shares there may be additional charges and taxes for particular instruments that you trade that are charged by the particular market. We may also charge you a fee if we are required to perform a service on your behalf that is not set out in our product details. Additional charges may also arise from particular currency withdrawals.

To view a full list of our charges associated with trading US shares, click here now.

Coinbase shares: the basics

Coinbase shares listed on the NASDAQ stock exchange on 14 April 2021. It listed to significant fanfare, finishing out its first day as a public company at $328 per share, giving it a market cap of over $86 billion. Coinbase went public through a direct listing rather than a traditional IPO.

What is a direct listing?

In a direct listing, a company’s employees and existing investors will convert their ownership stakes into shares that are then directly listed on a stock exchange to be purchased by institutional and retail investors. This negates the need for an underwriter, which is usually a large bank.

As a result, direct listings don’t have the same ‘safety net’ that IPOs do, because there’s no target price range for the company’s shares –something that’s usually determined by an underwriter. This means that in direct listings, share prices are completely at the mercy of market demand, which can cause increased volatility compared to going public through an IPO.

Find out more about how IPOs work, or learn how to take a position on IPOs with us.

Coinbase: a brief history

Coinbase was founded in 2012 by Brian Armstrong – who serves as the current chief executive officer (CEO) – and Fred Ehrsam. The company is headquartered in San Francisco, and it acts as a cryptocurrency exchange and broker for bitcoin, bitcoin cash, ether, litecoin and others.

What is Coinbase’s business model?

Coinbase’s business model is based on its two core products. The first is an exchange for trading the aforementioned cryptocurrencies – known as a Global Digital Asset Exchange (GDAX). The second is a user-facing platform for trading bitcoin, bitcoin cash, ether, litecoin and others.

Coinbase offers accounts to potential clients for cryptocurrency trading. In total, the company offers over 25 cryptocurrencies to its users, some of which are niche opportunities referred to as ‘altcoins’ because they are not widely known in the cryptocurrency mainstream and don’t have the name recognition of bitcoin, ether or litecoin.

The company charges a commission fee for its users to use its platform and its users can trade with leverage. It has two accounts: regular and pro. The regular account charges higher commissions, while the company’s pro account has lower commission fees for users.

Coinbase share price: how to analyse Coinbase shares

You should use both technical analysis and fundamental analysis to analyse the Coinbase share price once the company goes public.

• Technical analysis is concerned with chart patterns, technical indicators and historical price action
• Fundamental analysis is based on the fundamentals of a company, including its net revenue or profit and loss statements

You should use a mix of both of these forms of analysis when assessing the Coinbase share price once the company lists – especially since its share price could be volatile given the inherent instability in the cryptocurrency market.

Interested in analysis? Find out more at IG Academy