As Coinbase prepared for its direct listing earlier this year, it was clear that the company was approaching the process a little differently: from hosting a Reddit AMA – where it invited questions from retail investors on the often-feared social media site – to listing Satoshi Nakamoto – the pseudonym for the anonymous mastermind of Bitcoin – on the front page of its filing with the SEC ahead of the listing.
‘We take an egalitarian approach to IR,’ Anil Gupta, Coinbase’s vice president of investor relations, tells Corporate Secretary sister publication IR Magazine. ‘That was reflected in the desire to go public via a direct listing. We wanted to ensure that all shareholders – big and small – could participate. There’s such a passionate user base around crypto that it felt inauthentic to say the listing would be a deal with a small group of select investors.’
That approach was quickly in evidence. When conducting a direct listing, the issuer is responsible for organizing its own investor roadshows and meetings, but Coinbase had something else in mind. ‘One of our mantras is efficient execution,’ Gupta says, ‘so we elected to do a series of investor videos on our website. They scaled nicely and gave us a chance – along with the S-1 – to communicate our message to the retail and institutional communities.’
The company concluded its direct listing on April 14, with an initial valuation of $85 bn. As the first major cryptocurrency exchange to list on the public markets, Gupta says there was a recognition that the company needed to educate its potential investors.
On March 17, Coinbase made headlines by being one of the first (almost) public companies to host a Reddit AMA – a Q&A session on the social media platform. The majority of IR and governance professionals express discomfort when asked about the prospect of engaging with the Reddit community, but Coinbase was informed by its desire to bring retail and institutional investors on the same journey.
Still, it wasn’t as simple as posting a call for questions on the internet and watching them pour in. Doug Sharp, Coinbase’s associate general counsel, tells IR Magazine that he worked with SEC staffers and outside counsel to establish ground rules. ‘It was quite unique because we were doing it as part of our direct listing,’ Sharp says. ‘The SEC gave us some rules, but from a policy perspective we felt it made complete sense – giving the everyday retail investor a chance to ask a question too.’
In Coinbase’s post on Reddit announcing the AMA, it included five subjects that it wouldn’t be able to answer, but encouraged users to submit other questions over a three-day period. As of June 22, the post has more than 1,400 comments.
‘We worked with Reddit – their team was awesome,’ Sharp says. ‘We worked to filter out the things that were inappropriate. In total, we answered about 20 questions or so. We worked with the executive team to put out our answers both as a video and, where relevant, in-line. Then we filed the transcript, questions and answers with the SEC.’
The video responses from Brian Armstrong, Coinbase’s co-founder and CEO, and Alesia Haas, the company’s CFO, total about 42 minutes and are now hosted on YouTube, among other places.
Next up, the company hosted a pre-listing earnings call on April 6 where it announced its expected quarterly results and its outlook for 2021. After the direct listing, Coinbase held its first formal earnings call, on May 13. Once again, the egalitarian approach to IR shone through, as the company decided to use an interactive tool – called Say – that has been favored recently by Tesla. The tool allows retail investors, as well as covering analysts, to ask questions on the earnings call.
‘What’s really interesting is the questions we get from retail and the questions we get from institutional are not dissimilar,’ Gupta says. ‘The retail questions are often pretty good and focused on the long term.’
The cryptocurrency market has pulled back somewhat since Coinbase’s listing and so has the company’s share price. But Gupta knows that volatility comes with the territory.
‘It’s a marathon – this is not a short-term game,’ he says. ‘We’ve put our best foot forward with our first earnings call, but it’s a volatile environment. We feel comfortable about the messaging we’ve had, but the question is what this all looks like over the next five or 10 years.’