Coinbase went public last week and insiders and early investors sold about $5 billion in shares on the first trading day. The stock price started at $250 and went straight up to about $400 before it went down again to about $330.
CEO Brian Armstrong sold 749,999 shares at a price ranging from $381 to $410. According to SEC filings released on Friday, Armstrong`s total gain was $291,8 million. That is telling us that he sold about 1,5% of his stake in Coinbase.
But he was not the only one to sell shares in the company. Director and venture capitalist Frederick Wilson sold 4,70 million shares for proceeds of $1,82 billion. Wilson is a holder of at least 10% of the shares of Coinbase and that is a market cap of $63,6 billion.
Another 10% owner of Coinbase shares is Union Square Partners, and they sold $4,70 million shares for proceeds of $1,82 billion. Wilson is a partner in Union Square Partners and he and his firm`s fund accounted for more than 2/3rds of the total $5 billion worth of shares sold when Coinbase went public.
Marc Andreessen, who is a software engineer, venture capitalist and Coinbase director, is a holder of more than 10% of the exchange`s shares. He and his company Andreessen Horowitz sold a total of 1,18 million shares for $449,2 million, according to SEC.
As I pointed out in my recent article about the DPO (direct listing) last week, there is a huge difference between IPO and DPO. In this case; a direct listing is a liquidity event while an IPO is a capital-raising event.
This is why Armstrong and his team sold shares when they went public, and this is the whole point of their direct listing. The fact is that Coinbase doesn`t need money, so they are offering the public existing shares. That`s why we see where the shares is coming from.
In an IPO we see new shares being offered by the company to raise money that goes to the treasury. Coinbase doesn`t gain any proceeds with this DPO, but more holders are coming in and that will give the company the opportunity to raise more money in the future. If they need.
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