By Nathan Vardi
Armstrong went on to say that the direct listing process would deliver a more accurate market price for Coinbase’s shares, “rather than a guess” that was determined “behind closed doors and [by] a small number of participants.”
Another difference with the direct listing process was that there were no underwriters that could set lock-up restrictions on insider selling for six months or more. The reference point for the Coinbase IPO was $250, but on the first day of trading the stock soared to $388. It was at this and other levels that Fred Wilson, who sits on Coinbase’s board, pushed his venture firm, Union Square Ventures, to unload all of its Coinbase stock for $1.8 billion.
In total, Coinbase insiders have unloaded $3.5 billion in Coinbase shares since the IPO. According to VerityData, the biggest individual Coinbase sellers have been Coinbase co-founder Fred Ehrsam, who has sold $492 million in Coinbase stock; Armstrong, who has sold $292 million; and Coinbase president Emilie Choi, who has sold $231 million.
With the price of bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.22% and other cryptocurrencies plunging in recent months, the financial performance of Coinbase has taken a serious hit. Its stock has plunged to $70, which is 72% lower than its IPO reference price and 82% below the higher levels at which insiders like Union Square Ventures unloaded the stock. Coinbase and Union Square Ventures did not respond to requests for comment.
The role of venture capitalists in the IPO selling frenzy of 2021 has been notable. In 2016, Masayoshi Son, the billionaire founder and CEO of Japanese holding company SoftBank, announced that SoftBank had raised a $100 billion venture-capital fund to invest in hot new technology companies. One of the companies that SoftBank backed was Coupang /zigman2/quotes/225253473/composite CPNG -4.08% .
SoftBank had initially invested in the Korean online retailer in 2015, but the Vision Fund doubled down on the company and SoftBank became Coupang’s biggest shareholder, securities filings show. Last year, Coupang decided to list its shares in the U.S., conducting a massive IPO on the New York Stock Exchange. Coupang sold shares for $35 a piece, raising $4.55 billion.
Six months after the IPO, in September 2021, SoftBank started selling its Coupang shares when they were changing hands for $29.69, securities filings show. It sold $1.69 billion in Coupang shares last year. This year, as the speculative frenzy around technology companies started to crumble, Softank sold another $1 billion in Coupang stock, putting its total Coupang sales at $2.69 billion.
SoftBank’s stock sales and Coupang’s ongoing financial losses put the company in a poor position as investors reassessed risk assets this spring. Coupang’s shares recently traded for $13.17, marking a 62% plunge since its IPO.
SoftBank has also been selling the stocks of other companies it has pushed onto U.S. stock exchanges. In June 2021, Sofi Technologies /zigman2/quotes/222838146/composite SOFI -0.39% , an online personal-finance company, debuted on Nasdaq after merging with a SPAC called Social Capital Hedosophia, which had sold its stock for $10 apiece at its IPO. As the Nasdaq rose last year, Sofi arranged a secondary offering at $21.60 per share in which SoftBank sold a chunk of its holdings for $486 million. In total, insiders at Sofi have sold shares worth $984 million. Sofi’s stock recently traded at $7.05. SoftBank did not respond to a request for comment.
To some degree, the boom in speculative technology stocks that peaked in 2021 was driven by Robinhood Markets, which operates a trading app that became wildly popular with retail investors during the pandemic. Robinhood conducted its IPO last July, selling its stock for $38 and raising $1.89 billion, a big portion of it from individual investors and Robinhood users. Its two founders, Vlad Tenev and Baiju Bhatt, each sold $45.5 million in stock in connection with the offering. Robinhood’s stock /zigman2/quotes/228268942/composite HOOD +0.73% recently changed hands for $10.06, which is 73% below the IPO price. Through a Robinhood spokesperson, Tenev and Bhatt declined to comment.
Israeli mobile-games maker Playtika Holding /zigman2/quotes/208028170/composite PLTK -1.62% launched its IPO in January 2021, selling its shares for $27 apiece on Nasdaq, raising $1.9 billion. Most of the IPO proceeds went to Playtika’s main shareholder, Alpha Frontier, which has pocketed $1.66 billion from its Playtika share sales in total. Alpha Frontier is owned by a consortium of Chinese investors that is controlled by Shanghai billionaire Shi Yuzhu, securities filings show. MarketWatch could not reach Yuzhu for comment, and Playtika declined to comment. Playtika’s shares recently traded at $14.15, 48% below its IPO price.
Then there’s the Honest Company. The Jessica Alba–founded company went public in May 2021, selling shares for $16 each and raising $474 million. The IPO proceeds mostly went to L Catterton, which received $297 million. The private-equity firm’s co-CEO, Scott Dahnke, sits on the Honest Company’s /zigman2/quotes/226449347/composite HNST +11.70% board. Today, the Honest Company’s stock is changing hands near $3.25. L Catterton declined to comment. Before and after the 78% post-IPO plunge in the Honest Company’s stock, Alba has never sold a share.