Since plowing in at the debut, Coinbase's retail buyers were stung.

 

(Bloomberg) — The retail crowd helped Coinbase Global Inc. get a head start on its first day of trading. And the early participants are likely to have had a few bruises.

According to VandaTrack reports, day traders purchased a net $57 million of the cryptocurrency exchange's shares during its debut on the Nasdaq Stock Market on Wednesday. This total accounted for 7% of the $822 million invested on all U.S. stocks and exchange-traded funds by retail investors on the day, making Coinbase the fifth-most successful debut with the demographic since 2017.

They didn't waste much time getting started.

Almost a third of all retail dollars spent on Coinbase on Wednesday were spent in the first 20 minutes of trading, when the stock jumped 13 percent from its starting price of $381 to an intraday peak of $429.54. As the initial euphoria faded, retail demand slowed, and the shares pared their gains to close the day below the opening trading price.

Coinbase gained as much as 6.4% in early trading Thursday on news of a $246 million investment from Cathie Wood’s Ark Investment Management and positive analyst coverage, though the shares remained below their opening price.

Tayo Kuku, a 27-year old photographer based in Washington, D.C., is among the cohort of investors who bought in. But within 10 minutes of purchasing the stock at $394 and a few conversations with his friends who are also buyers, it “made me realize that I probably didn’t make the best decision jumping in that quickly,” he said.

“I obviously knew the risk of jumping in on a company as soon as it went public, but it just seemed like an obvious investment considering cryptocurrency has been the ‘next big thing’ for young investors like me.”

Fortunately for Kuku, he managed to sell at a profit at $415. Though he left unscathed, he still plans to “keep an eye out and may possibly dip my feet back in in the next few weeks.”

The debut of the first cryptocurrency exchange to list on a stock market in the United States was widely hailed as ushering in a new era for the oft-mocked asset class. This attracted the interest of retail traders, who poured in at a rate not seen since the launch of Rocket Cos., the parent company of the mortgage giant created by billionaire Dan Gilbert, making it the group's fifth most-popular new listing since 2017.

“It is pretty surprising to see such strong buying,” said Viraj Patel, global macro strategist at Vanda Research. “There was obviously a lot of hype around this and certainly Coinbase will be almost the best proxy for trading the crypto theme in the coming years.”

Coinbase was the most traded stock on Fidelity's website that day. According to brokerage numbers, more than 148,000 shares were traded there, nearly nine times more than runner-up Tesla Inc.

“What is interesting about Coinbase is that it is the first way for individuals to participate in this emerging competition for cryptocurrencies without being exposed to the uncertainty of those currencies,” Michael Wolf, CEO and co-founder of Activate, a technology consultancy company, said on Bloomberg Television. “We can see that Coinbase will be broadly owned – at this market cap, it will be held by index funds. It will allow both small investors and individuals to participate in the cryptocurrency revolution.”

Despite the hype, Coinbase was not the top option of at-home traders on Wednesday. The ProShares UltraPro QQQ exchange-traded fund (ticker TQQQ), a three-times leveraged tracker of the Nasdaq 100 Index, received $72 million in net retail buying on the day after falling by 3.5 percent.