Coinbase prospectus lacks key trading details for investors who want in on the direct listing

Coinbase prospectus lacks key trading details for investors who want in on the direct listing

Palantir, for example, said that 50 million shares were sold in the first eight months of 2020 ahead of the data analytics company's direct listing in September. Audio streaming company Spotify said close to 13 million shares changed hands in 2017 and nearly 8 million in the first couple months of 2018 just before its listing. Gaming platform Roblox, which is scheduled to list next month, said 31 million shares were transacted last year.

But Coinbase is very different in one critical way. All of those companies were able to show investors a history of substantial private trading in their stock to provide a sense of demand. That's an important data point for price discovery, since investment banks in a direct listing aren't out shopping the stock to build a book of bids from institutions.

Instead of going public through an IPO, Coinbase is following companies like Spotify, Slack and Palantir by pursuing a direct listing, allowing existing investors to sell their shares on the open market at the time of the debut.

Coinbase may be targeting an astronomical valuation when it goes public in the coming weeks, but it's yet to give investors an indication of what kind of prices people are