The past few years has seen an explosion in companies going public through the IPO process. Most are successes, seeing shares immediately rise as they start trading. However, there have been a number of companies that have initially slid from their opening price, creating what’s called a “failed IPO.”
Some companies have been able to recover in time, most famously social media giant Facebook (FB) which had a failed IPO when it first went public.
The most recent failed IPO? Coinbase (COIN). The cryptocurrency brokerage company went public right as Bitcoin prices were peaking in the spring, and shares followed cryptos down.
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However, the company fared well as investors bought the dip. The company reported that it grew its customer base by over 12 million in the most recent quarter, with big buys from institutional investors. As a brokerage firm, whether the price is up or down, they can make profits on the volume.
Action to take: Coinbase is a solid play on the growth of cryptocurrency investments, and its massive earnings beat is a sign that it can perform well when prices falter. Shares are still well off their IPO price by about 18 percent, even after rising in recent weeks, and following a drop as crypto prices dropped on Wednesday.
For traders, the December $300 calls, last going for about $29, are a reasonable play on shares continuing their recently-started rally in the next few months.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.