Since making its much-anticipated market debut, Coinbase has performed mostly in the red and that appears to be weighing on some of its publicly traded peers.
The stock—which began trading on the Nasdaq on April 14—has declined from more than $410 a share to about $293 at the close on April 22. Since its direct listing day, Coinbase is down more than 10%.
To be sure, it's still early days for the stock. More often than not, it takes time for a direct listing of a stock to find its footing, as noted by hedge fund executive Jeff Dorman.
"I'm not surprised at all by the COIN price action," Dorman, the chief investment officer of Arca, told The Block. "No major banks have written research on COIN yet. Plus most investors will want to see another quarter of numbers to see if 1Q was a flash in the pan or not."
Still, while Wall Street has been digesting Coinbase, firms like Silvergate, Galaxy Digital, and Voyager have seen their market capitalization and stock prices drop.
Data from The Block's Data Dashboard shows that the market cap for Voyager, a retail crypto broker, has fallen from $3.3 billion on April 13 to a low of $2.1 billion on April 20. Galaxy Digital, which operates several institutional businesses, has seen its market cap fall from $3.13 billion to $2.75 billion over the same time period.
To be sure, both Galaxy and Voyager were on breakneck tears ahead of Coinbase's direct listing and are still currently trading in the green since the beginning of the year. Voyager is up 371% year to date, whereas Galaxy is up by around 185%.
Crypto-friendly bank Silvergate has also taken a hit, down more than 30% since the Coinbase direct listing. CEO Alan Lane declined to comment via email, but noted post-$COIN market activity "seems to be a bit of the old adage 'buy the rumor, sell the news.'"
Juxtaposed with the anticipated $100 billion-plus valuation some market observers anticipated for Coinbase, the exchange unicorn's current market value might have made other companies in the space look too rich. FactSet data shows Silvergate and Voyager currently command 22-23x FY'21 revenue multiples. Those multiples have come down since Coinbase's debut. Coinbase is currently trading at ~12.5 times revenues.
Eric Risely, a partner at Architect Partners, said that "it's fair to say crypto equities are likely on the expensive side now."
"The fundamental question is, can they 'grow' into their valuations," he added. "That answer entirely depends on how quickly crypto assets attract institutional interest as an investable asset class."
As for $COIN specifically, Dorman said that the stock will eventually find its way into Wall Street's mutual and exchange-traded funds — likely a positive development in the long-term.
"Many of the equity mutual funds and indexes will hold this, but it will take time," he said.
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