Retail investors lined up in droves to buy shares of cryptocurrency exchange Coinbase as it debuted on the Nasdaq, surpassing the popularity of many other major technology and “meme-stock” favourites.
Data from Breakout Point showed Coinbase’s listing attracted a horde of retail investors, higher than that flocking to other popular tech stocks including GameStop and Tesla. It also beat stocks including Airbnb, Roblox, Snowflake and Palantir.
Using an internally developed metric, Breakout Point analysed investor data from each stock’s top popularity days with retail traders.
Coinbase came in second overall of the group, knocking up 433 points on 14 April, its stock market flotation day.
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So-called meme stocks in January soared thanks to a boom in retail investors, thanks to the boom that powered their rise in the first quarter of this year. Cinema chain AMC topped Breakout Point’s metric at 460 points, while GameStop came in third at 427.
In comparison, rentals platform Airbnb saw a popularity metric of 245 among retail investors, while gaming favourite Roblox gained 177 and data firm Palantir ranked at 100.
“This phenomenon of retail investors acting as a collective and led by social media and celebrity investors, is here to stay,” said Nigel Green, chief executive of financial advisory firm deVere Group. “Moving forward, they are likely to be as influential as major hedge funds in moving markets.”
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In a 1 April note, Goldman Sachs analysts said retail trading has been a key driver behind high levels of US cash equity volumes earlier this year. Volumes reached record highs of 15 billion shares and 41 million contracts in the first quarter of this year, across US cash equities and multi-listed options respectively.
Coinbase also drew fans from the group of more seasoned institutional and corporate investors. Cathie Wood’s Ark Investment Management bought up a collective $245.9m in shares across three of its funds on 14 April.
Filings showed the investor spread out the Coinbase shares across its Innovation, Fintech Innovation and Next Generation Internet ETFs. The news of Ark’s support for the stock helped Coinbase shares to rise more than 10% in pre-market trading on 15 April.
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“Many traditional investors may have opened their arms to this new kid on the block,” Danni Hewson, financial analyst at AJ Bell, told Financial News.
“There’s one big difference between this tech float and those of two recent float ‘failures’ and that is profit. When both Uber and Deliveroo set out their stall for investors both had stellar growth potential, but both were loss-making,” Hewson said.
She added that Coinbase “charmed doubters” with its first-quarter results, which were “pretty decent by anybody’s standards.” The exchange reported an estimated profit of $800m, more than double the profit it made in 2020.
Nasdaq gave Coinbase a reference price of $250 per share for its launch on 14 April, equating to a valuation of about $65bn. As its shares floated, Coinbase’s market capitalisation skyrocketed above $100bn before swinging wildly and ending its first day at $85.7bn.
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