The Coinbase CEO sold 749999 shares of COIN on the first day of the offering

[Leviathan.007]

Coinbase, a US-based cryptocurrency exchange, first opened in Nasdaq last week. On the first day of the offering, Brian Armstrong, CEO of Coinbase Exchange, sold nearly $ 292 million worth of COIN shares.
According to the latest case filed with the US Securities and Exchange Commission (SEC), CEO Coinbase sold a total of 74,999 shares of Coinbase in three different stages, ranging in price from $ 381 to $ 410. The stock began trading on April 14 and went on sale under the name NASDAQ: COIN for a reference price of $ 250. ...
The closing price of COIN shares closed at $ 342 on Friday. The shares of this crypto exchange reached the highest price level of $ 420 on the first day and stabilized its correction at a lower price of $ 300 on the same day.
Cathie Wood’s Ark bought $ 249 million worth of COIN shares on Wednesday, according to a recent Bloomberg report. In addition, the company added 34,286 shares to its COIN portfolio on Thursday, buying 34,116 shares worth approximately $ 110 million.

Coinbase stock offering
According to a report from Coindesk, Frederick Wilson, CEO of Coinbase and a leading investor, reduced his portfolio by selling 4.70 million shares worth $ 1.82 billion. Together with Mr. Wilson, Marc Andreessen and colleagues at Union Square Investment Company also sold part of their assets.
Paul Grewal, Chief Legal Officer at Coinbase: "To provide enough supply and invite new investors in, a company must sell a minimum of the total cap table for a successful listing. The largest shareholders are typically the investors and executives, so this means that they will often have the largest sales on listing day. For Coinbase, this means that we saw our investors and certain executives create this pool of liquidity. Without their sales, CB could not have successfully created a supply of shares that could enable new investors to come in, which is basically the point of a DL."
Coinciding with $ 335 billion in trading in the first quarter of 2021, Coinbase reported strong financial figures.

Source: https://www.financemagnates.com/cryptocurrency/news/coinbase-ceo-brian-armstrong-sold-749999-coin-shares-on-opening-day/

[The Sceptical Chymist]

Yeah well, most insiders of privately-held companies just can't wait to cash out once they go public--so this news isn't exactly shocking.  The same thing happens after a lot of IPOs, and there's nothing particularly sinister about it (or newsworthy, for that matter).  



Looking at the above chart, the CEO was fortunate to sell at the prices he did--but who knows what the stock is going to do in the future.  From my brokerage's analysis page, COIN appears to have a P/E of 208, so I'd say the stock is seriously overvalued.  If Coinbase were a company that was growing like crazy, that P/E might be acceptable to some investors, but I'm not sure how much they're actually growing their business.  I betcha COIN will see much lower prices in the coming months.

[bryant.coleman]

Good for him. He sold his stocks at peak levels. I am actually surprised that he didn't sold more of his shares. Remember that Coinbase went for a direct listing and not an IPO. In case of an IPO, then I would have expected Brian Armstrong and the other promoters to offload a few billion USD worth of shares (which is normal with any IPO). So this amount ($292 million) doesn't sound too high. He may sell more of his shares in the coming days and weeks.

[(o)(o)ilikeboobs(o)(o)]

We are seeing a market cap valuation of over $ 80 billion. He has $ 13 billion and is mostly stocks so I'm not too worried about profit-taking. To make a valuation of Coinbase needs to observe investor adoption and market trends over a long period of time.

[Anonylz]

Yeah well, most insiders of privately-held companies just can't wait to cash out once they go public--so this news isn't exactly shocking.  The same thing happens after a lot of IPOs, and there's nothing particularly sinister about it (or newsworthy, for that matter).  



Looking at the above chart, the CEO was fortunate to sell at the prices he did--but who knows what the stock is going to do in the future.  From my brokerage's analysis page, COIN appears to have a P/E of 208, so I'd say the stock is seriously overvalued.  If Coinbase were a company that was growing like crazy, that P/E might be acceptable to some investors, but I'm not sure how much they're actually growing their business.  I betcha COIN will see much lower prices in the coming months.

It may not appear surprsing but such behaviour don't exactly spike enough confidence in the part of investors, if the ceo can already dump part of his shares at peak price what will stop others from doing so in the next couple of days, certainly the price will dip even more judging by what is already happening, soon the real value of COIN will be determined.

[slapper]

Stock always has a high volume from institutional investors, banks, and the government. And fundamental analysis moderately works with stock. Right now, it is apparent that COIN stock is quite overrated and that is why even Coinbase CEO decided to sell a lot of his shares on the first day. If I had a chance to buy Coin, I would wait until it is at least lower than $300. Moreover, currently, all eyes are on bitcoin and cryptocurrency so that COIN also has some decent advantages over other stocks. Soon, when the crypto hype over, people will reconsider and make a appropriate price for it

[casperBGD]

~snip
I betcha COIN will see much lower prices in the coming months.

agree, I also expect to see COIN down from these levels, not counting eventual bear market, which could see it much lower than initial price

on the other hand, as I saw, the explanation for the sale by top official is that it is a direct listing, so if they would not sale their, who would sell which, since they were the only ones with shares, make a bit sense, it is not that direct listings are usual situation on stock exchange
they were fast to list in a bull market, and the price was high on listing, but valuation is high above competition, P/E 208 is insane with their growth prospect at the moment

[laredo7mm]

~snip
I betcha COIN will see much lower prices in the coming months.

agree, I also expect to see COIN down from these levels, not counting eventual bear market, which could see it much lower than initial price

on the other hand, as I saw, the explanation for the sale by top official is that it is a direct listing, so if they would not sale their, who would sell which, since they were the only ones with shares, make a bit sense, it is not that direct listings are usual situation on stock exchange
they were fast to list in a bull market, and the price was high on listing, but valuation is high above competition, P/E 208 is insane with their growth prospect at the moment

How you will determine the price of Dogecoin? In crypto, it is not necessary to have a good development company or active team which I can say after seeing the price of doge. If a useless coin can go more than 7500X then it won't be so hard for a well-established company to manipulate the market. I think it could go 2 to 3X from where it is now.

[BrewMaster]

How you will determine the price of Dogecoin? In crypto, it is not necessary to have a good development company or active team which I can say after seeing the price of doge. If a useless coin can go more than 7500X then it won't be so hard for a well-established company to manipulate the market. I think it could go 2 to 3X from where it is now.

but there is a difference between manipulating altcoin market and manipulating stock market.
first of all the stock market is so much bigger and has more experienced traders that can see right through the manipulation, unlike the very small altcoin market filled with newbies that fall for the manipulation every single time.

secondly if someone tries manipulating altcoin market the final result is possible profit but if someone tries manipulating stock market the final result is an investigation into this illegal act and eventually arrest and jail time in addition to a big fine.

[el kaka22]

CEO selling that much is not the news there, obviously he would love to cash out, he is the CEO and he wanted to be finally be paid and get out of this waiting period, he wasn't paid like this at all, and now that IPO happened he was free to sell on the market and then get paid finally.

The great news for him and the shocking for us is that he managed to sell as much as 410 dollars, by calculation he sold about 292 million dollars according to the news, that is a lot, that is really a lot, the average comes down to 389$ per share when he sold, we all know it started at around 250$ so he waited for it to pump and didn't sell it right away, that is the great news for him.

I think I would have done the same thing if it was me in his place, who would say no to nearly 300 million dollars, even if you could have one billion if you waited, I would still not wait and risk it.

[perfect999]

Good for him. He sold his stocks at peak levels. I am actually surprised that he didn't sold more of his shares. Remember that Coinbase went for a direct listing and not an IPO. In case of an IPO, then I would have expected Brian Armstrong and the other promoters to offload a few billion USD worth of shares (which is normal with any IPO). So this amount ($292 million) doesn't sound too high. He may sell more of his shares in the coming days and weeks.

Sure he’s lucky that he sold at that rate. But, I don’t think the rate this has dropped now is the rate it’s going to remain, it’s still going to be growing in the future, it’s just with time and when there are more investors coming you will start seeing the value of the company increasing and that would mean more profit for the investors.

So this is just the start point, the value it’s likely going to reach in the future will be way more higher than the value it started with now.

[cabron]

By the millions he had gotten from selling at the price of more than $400, he could buy more of his shareholding again while has more profit to enjoy. Making money is sure easy when you are the CEO and knows the market price became too high already.  It becomes just like how the crypto markets react when a coin is listed on the exchange.

[jaysabi]

Yeah well, most insiders of privately-held companies just can't wait to cash out once they go public--so this news isn't exactly shocking.  The same thing happens after a lot of IPOs, and there's nothing particularly sinister about it (or newsworthy, for that matter).  



Looking at the above chart, the CEO was fortunate to sell at the prices he did--but who knows what the stock is going to do in the future.  From my brokerage's analysis page, COIN appears to have a P/E of 208, so I'd say the stock is seriously overvalued.  If Coinbase were a company that was growing like crazy, that P/E might be acceptable to some investors, but I'm not sure how much they're actually growing their business.  I betcha COIN will see much lower prices in the coming months.

No one is pricing a company like COIN based on the present earnings.  It's a speculative investment on how much it's going to earn in the future and how big this market can become.  In that sense, it's no different from ultra speculative equities like Tesla, which also trades at a valuation that makes zero sense in the present.  Also, pretty fitting if you ask me that COIN itself is a speculative investment considering it's built upon buying a speculative asset like crypto.

###

There's an extra digit in the title that's bothering me.  OP title says 749,999 shares, but the post says 74,999 shares.  Huge difference.

[Sithara007]

There's an extra digit in the title that's bothering me.  OP title says 749,999 shares, but the post says 74,999 shares.  Huge difference.

It's 749,999 and not 74,999. Brian Armstrong sold shares worth $292 million at an average price of $389 per share. Still the number of shares sold is a small fraction of his overall holding in Coinbase. As per the 8-K filing made to the SEC, Armstrong holds a total of 2,753,924 Class A shares and 36,851,833 class B shares of Coinbase. Marc Andreessen owns 5,516,037 Class A and 23,961,498 Class B, while Fred Ehrsam and Fred Wilson owns more than 10 million shares.

[jaysabi]

There's an extra digit in the title that's bothering me.  OP title says 749,999 shares, but the post says 74,999 shares.  Huge difference.

It's 749,999 and not 74,999. Brian Armstrong sold shares worth $292 million at an average price of $389 per share. Still the number of shares sold is a small fraction of his overall holding in Coinbase. As per the 8-K filing made to the SEC, Armstrong holds a total of 2,753,924 Class A shares and 36,851,833 class B shares of Coinbase. Marc Andreessen owns 5,516,037 Class A and 23,961,498 Class B, while Fred Ehrsam and Fred Wilson owns more than 10 million shares.

Thanks for the correction.  In that case, the first post is missing a digit in the number of shares sold and it's bothering me.  OP title correctly says 749,999 shares but the first post says 74,999 shares.  Huge difference.

[tygeade]

To make a valuation of Coinbase needs to observe investor adoption and market trends over a long period of time.

I think the adoption will be much over a long period. I’m saying based on the rate at which people are accepting it at this time, and also for the fact that they are the first to go public, they will be kind of stealing the spotlight.

As per the 8-K filing made to the SEC, Armstrong holds a total of 2,753,924 Class A shares and 36,851,833 class B shares of Coinbase. Marc Andreessen owns 5,516,037 Class A and 23,961,498 Class B, while Fred Ehrsam and Fred Wilson owns more than 10 million shares.

So the idea behind for selling 749,999 shares is to buy back at cheaper levels? I am not seeing most other corporate are following this kind of strategy. When those inside people who are responsible for further growth are not holding, then who else?

[(o)(o)ilikeboobs(o)(o)]

To make a valuation of Coinbase needs to observe investor adoption and market trends over a long period of time.

I think the adoption will be much over a long period. I’m saying based on the rate at which people are accepting it at this time, and also for the fact that they are the first to go public, they will be kind of stealing the spotlight.

Obviously, they have too many advantages as you say they were the first to pave the way when they were the first crypto company to raise an IPO and be listed on the largest US stock exchange.
Their profit taking is also a very normal event because they don't think they are making such a good profit.
Maybe they will regret their job as the value of Coinbase's shares increases the way UNI or 1inch did. I can only imagine that much.

[dothebeats]

That seems to be normal? Most of the top execs and insiders would probably want to sell some shares for 'distribution' and buy them back in once the price is cheaper. With the case of Coinbase, their stock prices would definitely be tanking for quite some time since the valuation they received is somewhat inflated, as was analyzed by some traders and trading circles. This means that Armstrong would have an easier time to buy back shares, as the prices are way cheaper than he sold it before. Just casually inflating their net worth with no sweat.

[jaysabi]

That seems to be normal? Most of the top execs and insiders would probably want to sell some shares for 'distribution' and buy them back in once the price is cheaper. With the case of Coinbase, their stock prices would definitely be tanking for quite some time since the valuation they received is somewhat inflated, as was analyzed by some traders and trading circles. This means that Armstrong would have an easier time to buy back shares, as the prices are way cheaper than he sold it before. Just casually inflating their net worth with no sweat.

That's not why, it's for diversification. If you've accumulated significant value in what was previously an illiquid asset (Coinbase stock), you cash out as soon as you can (once it becomes liquid) to diversify into other assets and reduce your risk of having so much value tied to one specific asset.

[bryant.coleman]

So the idea behind for selling 749,999 shares is to buy back at cheaper levels? I am not seeing most other corporate are following this kind of strategy. When those inside people who are responsible for further growth are not holding, then who else?

Not a bad strategy at all, if you ask me. I just checked the NASDAQ website and the P/E for Coinbase stands at 180.21. At this level, the stock definitely looks overpriced (although we have stocks such as Tesla, which have P/E as high as 1,000). Also considering the number of stocks he own, the 749,999 figure mentioned here represents just a small fraction. It is not going to change the share holding pattern in a major way.