The Coinbase (COIN) direct listing on April 14, 2021 coincided with a near-term top in Bitcoin, which hit an all time high exceeding $64,500 on the same day. There was much ink spilled about the insiders of Coinbase selling their shares but we chose not to write about it last week as insiders often sell when the company goes public. Insider buying at an IPO is however unusual, and when we spot that, we often highlight it.
The selling by Coinbase insiders was driven by the choice of the company to go public through a direct listing, a process that Venture Capitalist Bill Gurley is a big fan of after his experience with the IPO of Elastic (ESTC). We wrote about insider purchases at Elastic three weeks ago when Benchmark Capital’s Chetan Puttagunta picked up 5,000 shares for his personal portfolio.
The initial sales of Coinbase by its insiders like venture funds like Andreesen Horowitz and Union Square Ventures were related to the direct listing. In a direct listing the insiders and promoters/funds sell shares directly to the public. The latest sales highlighted below however stand out because they occurred as the stock declined after going public and one of them was by Fred Ehrsam, a cofounder of Coinbase. Whether the simultaneous decline in Bitcoin and Coinbase over the last few days marks the end of this bubble is a question best answered by crypto experts but the latest sales by Coinbase insiders certainly gives me pause when considering an investment in the company.
Welcome to edition 565 of Insider Weekends. Insider buying decreased significantly last week with insiders purchasing $29.53 million of stock purchased compared to $141.21 million in the week prior. Selling also decreased significantly to $1.68 billion compared to $3.16 billion in the week prior.
Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week went up to 57.06. In other words, insiders sold more than 57 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 22.37.