Coinbase floated on the Nasdaq in the wee hours of 3am AEST this morning. While most of Australia was sleeping, the cryptocurrency trading app’s share price bombed. It started its trade at US$386.31, but by the time most of us woke up at 6am AEST, it was swapping hands for just US$328.28.
Having said that, Coinbase’s US$385.31 opening price is much higher than Nasdaq’s reference price of US$250.
But what does all this have to do with Australian banking giant Westpac? Let’s take a look.
A friend of a friend…
It was first suggested that Coinbase’s floating could contribute $500 million to Westbank’s coffers. Not a bad payday for the bank, which didn’t have to put in much effort to receive it.
This is all because of an investment Westpac made into a capital fund by the name of Reinventure.
You see, way back in 2015, Reinventure made an investment into the, now much discussed, Coinbase. Now, in 2021, it’s making a big profit off of that decision.
What happened when Coinbase debuted?
Due to the volatility of Coinbase’s first day trading on the Nasdaq index, its valuation has slipped lower than was expected. According to a report from Bloomberg, Coinbase’s opening share price gave the company a valuation of US$100 billion.
At its intraday high (a whopping US$429.54), Coinbase had a valuation of US$112 billion. Unfortunately for Coinbase, Reinventure and Westpac (along with many others, I’m assuming), by the end of the day’s trade Coinbase was valued at around $86 billion.
The Motley Fool Australia previously reported on the US$70 billion to US$100 billion estimation made of Coinbase’s valuation by the Australian Financial Review.
We reported that, if that were to be the case, Reinventure would come out with a profit of roughly $450 million from its $50 million investment.
Not a bad payday for Reinventure, and of course, Westpac.
Westpac share price snapshot
Even after Coinbase’s exciting debut, the Westpac share price is sluggish on the ASX today.
At the time of writing, shares in Westpac have lifted 0.63%, trading at $25.49.
The banking giant has a market capitalisation of around $92.9 billion, with approximately 3.6 billion shares outstanding.