Ross Gerber, Gerber Kawasaki Wealth & Investment Management CEO joins the Yahoo Finance Live panel to discuss to discuss the public debut of Coinbase on the Nasdaq.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. We are awaiting the opening trade here on the Coinbase direct listing at the NASDAQ. As it stands, $375 a share. The latest indication there, up notably from a reference price of 250 bucks a share. Of course, if that price holds, it will be the largest direct listing ever for the cryptocurrency exchange, making history in its debut.

And for more on that, I want to bring on Ross Gerber, the champion, I should say, of Yahoo Finance's Stock Madness Tournament held back in March. Gerber Kawasaki Wealth and Investment Management CEO joins us now. Ross, you, of course, have been a crypto enthusiast for a bit here. You teamed up with the Winklevoss twins' trading platform Gemini to offer it to your clients as well. It's a big day for crypto writ large, but obviously a big day for Coinbase. What's your reaction as we see potentially here a record in Coinbase's direct listing?

ROSS GERBER: Well, you know, I want to shout out to my Twitter fans. You know, we've been talking about this all morning. This is the beginning of what I consider the new financial system. Coinbase is the leader here in building this new financial system. Clearly, it's evolved to a point where there's no turning back. And this is just a momentous moment for the crypto business and industry and finance in general as an entirely new set of leaders. You know, while everybody's talking about, like, JP Morgan and Goldman Sachs earnings and Wells Fargo, these firms won't exist potentially in the next 20 years. So, you know, crypto is the future. And this is an exciting day.

AKIKO FUJITA: What about the competition, though, that's coming online? Certainly we're not talking about traditional banks anymore, Ross, but there are a number of other exchanges out there. And there's been concern, some would argue, that there's a bit of a race to the bottom that could potentially happen in the way that Robinhood brought commissions down for so many other trading platforms. Do you see that as a big headwind for Coinbase?

ROSS GERBER: In fact, I'll take it to another level. I have a partnership with Gemini, the competitor. We're much cheaper than Coinbase. We offer protections that Coinbase doesn't have. If you want to open a crypto account and pay, you know, 90% less on a transaction, you can do that with my firm right now. So feel free to reach out. We're transferring tons of assets from Coinbase as we speak. The biggest issue we have is just trying to get the accounts open as quickly as possible at Gemini.

So, yeah, everybody's going to undercut Coinbase. And that's going to happen. 90% of their revenues are from the retail trader paying over 2% in commissions. It's an absurd amount. But it's an unregulated market with no competition. So now, that changes. And that's why I think investors should be real careful what they pay for Coinbase stock because, you know, it's possible that their margins are at the all-time high right now compared to what's going to happen over the next several years as real competitors like Gemini and Bittrex and Binance undercut them in costs. And like firms like ours, we're providing more services and protections for investors than what Coinbase offers. So, we expect to transfer a lot of assets from Coinbase.

ZACK GUZMAN: I'm glad you point that out because just when you compare kind of the transaction fees here-- and NewConstructs was out with a note saying that their valuation in Coinbase shouldn't be as close to $100 billion. It should be closer to about $20 billion when you think about the percentage of revenue from trading that some traditional exchanges like NASDAQ or the New York Stock Exchange's parent company, closer to 0.01%, and Coinbase is closer to 0.5%, as you're pointing out here. That's inevitably going to come down.

And I use Gemini, too, to be frank. I mean, there's a bunch of other opportunities out there as this space develops. But when you talk about maybe where fair value might be for a Coinbase and you're telling people to be careful, we're about to see it open if this holds at 375 a share. So where do you think we would land maybe a year out if we do see prices come back down to earth on Bitcoin?

ROSS GERBER: Well, I think it's kind of like, you know, what we're seeing with Bitcoin itself. You know, Coinbase is the only player in town, really, right now. So you get all the institutional money that buys Coinbase and puts it in their portfolio. And I don't think that's per se a bad idea. I just think your upside potential is potentially really limited, knowing what the competitors are doing. I actually have accounts at four different Bitcoin exchanges. And so I've used all of them, and I have for many, many years.

And quite frankly, Coinbase has done a great job over the last five years making their platform really user friendly and much better and actually providing some level of customer service compared to where they were. But, like, I see the competitors as more attractive from an investment perspective. But there's no opportunity. So people will just buy Coinbase. So as time goes on and more opportunities arise for people to invest, I think that makes Coinbase maybe less attractive.

But I think for now, you know, I'm not a buyer here, but I wouldn't tell people not to buy it either. I just don't play the game that everybody's buying something, I buy it. You know, people don't pay me to do that. So, you know, I'm going to watch Coinbase. And maybe I buy Roblox today. You know, I think they're making a ton of money, too, so, you know.

AKIKO FUJITA: That's a whole other play there, but Ross, no question that this listing is going to bring a lot of new investors into the market, who are going to say, look, is it better to go for the pure play, investing directly into cryptos, or should I be investing in the infrastructure, the ecosystem? Which side do you stand?

ROSS GERBER: Well, I tell people every day the same thing, that if you want to play the game, you play it by buying Bitcoin. It's simple to do. You can do it on Square. Square's a great app. You know, I buy $100 a day of Bitcoin. I just-- you know, every day, I buy $100 of Bitcoin. And I've been doing this for now seven years. And boy, that was a good idea. You know, all the Bitcoin I sold in my life was the stupidest idea.

So, let me explain this to people so it's 100% clear. You buy this stuff, and you dollar cost average it, and you hold it for the next decade. Do not sell it. Do not trade it. Do not play games. You will not outsmart the market. But if you buy cryptocurrencies like Bitcoin or Ethereum, I think you're going to be best served. I think there's opportunities in the ecosystem. But that's a different game. And the game I want to play is the Bitcoin game. And that's the game I'm in.

AKIKO FUJITA: That's the clearest takeaway we've gotten so far today, Ross. Hold it for 10 years there. Hold it for a decade. Ross Gerber, Gerber Kawasaki Wealth and Investment Management CEO, always good to talk to you.