April 22, 2021

Europe’s fintechs field frenzied demand for Coinbase shares

Coinbase’s direct listing last week was a watershed moment for the crypto sector, but also was a great moment for European trading apps as retail investors bought big.

Ryan Weeks

2 min read

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Coinbase’s direct listing on Nasdaq in the US last week was a watershed moment for the crypto sector globally — and retail investors in Europe were champing at the bit for a piece of the action.

A handful of neobrokers and more traditional investment platforms told Sifted that they began supporting trading in the stock the moment it listed.

  • A spokesperson for Freetrade, the London-based neobroker, said Coinbase was the app’s most popular day-one stock market debut to date, attracting 10 times the buy orders of second place Airbnb (which floated in December last year).
  • Manuel Heyden, CEO of Cologne-based neobroker Nextmarkets, said investor demand had been high since the listing. Leveraged trading (which can yield higher returns but for greater risk) in Coinbase shares on the platform exceeded physical stock trading, he added.
  • Coinbase (and a niche London-listed crypto mining company named Argo Blockchain) have consistently topped a table of Hargreaves Lansdown’s most popular shares since the direct listing on April 14. Hargreaves had 1.5m customers as of December 2020.
  • Digital bank Revolut, which has some 15m customers, has also supported trading in Coinbase shares since the company listed.

Everyday investors piling into Coinbase shares is part of a wider trend which fintech firms are in large part responsible for: a massive expansion in investor access to the stock market and IPOs.

Bob Cortright, CEO of brokerage infrastructure firm DriveWealth (which counts Revolut and Freetrade as clients), recently told me that a major cause of the GameStop debacle was all the additional retail trading volume injected into the market by the likes of Robinhood — which he thinks “just overwhelmed the system”.

But enhanced access isn’t necessarily a good thing for investors either. Just ask those who got burned buying Deliveroo shares through Primarybid.

Coinbase fetched an $85bn valuation when it debuted last week. The crypto exchange’s market cap is already down significantly, at around $65bn. Its founders and backers, meanwhile, have pocketed hundreds of millions of dollars.

David Kimberley, an analyst at Freetrade, wrote in a blog post ahead of the listing that Coinbase “is likely to be a prisoner of market volatility for some time to come”. Coinbase CEO Brian Armstrong himself has been upfront about the risks of investing in his company.

In a letter published in February, he wrote: “You can expect volatility in our financials, given the price cycles of the cryptocurrency industry. This doesn’t faze us, because we’ve always taken a long-term perspective on crypto adoption.”

Investors can't claim they weren’t warned.