This is a segment of the Forward Guidance Newsletter. To read the complete edition, Subscribe.
The expected listing for the Stablecoin issuer circle on the New York Stock Exchange tomorrow is about four years after another crypto milestone, Coinbase's public market debut.
I wrote yesterday about what happens after CRCL shares the list and how the robust institutional demand for circles is not necessarily the case.
“It's difficult to predict the exact impact of this list,” said Matteo Greco, senior associate at FineQia. “In 2021, there was a widespread belief that Coinbase's stock would skyrocket after the NASDAQ debut. The outcome was completely different.”
Coinbase's valuation as of the direct list in April 2021 was widely considered to exceed fair value, Greco told me. And the timing was “unfortunate.”
According to Yahoo data, Coin Shares opened for $381, but closed on the first day at $328. BTC reached a new high in November 2021, and that was the beginning of the Bear Market. Coinbase stocks were occasionally below $50 in mid-2022.
The shares were recovered to around $260 today, but Greco noted that early investors have been virtually underwater for more than four years.
The timing of Circle's list looks strong as Stablecoin use cases increase steam and propose US laws on the table. Still, predicting how CRCL sharing will move in the NYSE is challenging, Greco argued.
“The main factor is valuations related to what market participants deem to be at their fair value,” he said.
The $7.2 billion valuation circle is targeted (considering the IPO upsize filed on Monday) below the $7.7 billion valuation obtained in the April 2022 funding round. The final IPO price is reportedly expected on Wednesday evening.
Compass Point Analyst Ed Engel pointed out that the $7.2 billion valuation in the first quarter of the year means a multiple of 14.3 times. Coinbase and Robinhood are trading at approximately 30 times the estimated 2025 EBITDA.
