Category: Crypto Exchange

Wall Street is buzzing as the largest U.S. crypto platform is setting up for its debut on a traditional exchange on Wednesday. As Bitcoin and other cryptocurrencies rise to record levels ahead of the direct offering there has been varied speculation about the listing price.

The Nasdaq on Tuesday night set a reference price for the company at $250 per share, meaning the company is can be valued at around $49.19 billion USD. Should Coinbase hit the public market around its latest private market valuation of $100 billion, taking into account a fully diluted share count, it would instantly be one of the 85 most valuable U.S. companies. Nearly 115 million Coinbase shares will be put on the market to start.

The opening public price will be determined based on buy and sell orders in the opening auction on Nasdaq.

Nasdaq

Varying Expectations of The Listing

Investors expect that valuations could top $100 billion, since the company just published an astounding set of preliminary Q1 2021 results, with revenue jumping 9x year-over-year. In an implied valuation on Tuesday by FTX exchange, Coinbase was valued at approximately $150 billion USD.

Coinbase would be valued more than Nasdaq, which has a market cap of $25.9 billion and possibly the Intercontinental Exchange (parent company of the New York Stock Exchange), valued at more than $66.9 billion.

They make more money than any publicly listed exchange in the world. They’ll make more money than Nasdaq… Coinbase is also not the most profitable cyrpto exchange in the world.

Tom Lee, Fundstrat founder

There are positive and negative outlooks at the valuation of Coinbase, Stock research firm New Constructs stated it should be valued at $18.9 billion USD, since “the company has little-to-no-chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion“.

On the other hand Susquehanna, a research and trading firm was considerably more optimistic stating a fair valuation would be between $96 and $108 billion USD, due to the company’s high growth.

Can Coinbase Be Consistently Profitable?

This could be a pivotal moment for the crypto currency industry however, investors need feel the need to practice caution, since the company has a dependence on the price of virtual currencies, which tend to be volatile. So the implication is that Coinbase’s revenue is correlated with the level of activity in cryptocurrency and especially Bitcoin and Ethereum. If price or volume declines, their business, operating results, and financial condition would be adversely affected.

The success of Coinbase and cryptocurrencies in general seems to have inspired competitors too. The head of the California-based cryptocurrency exchange platform Kraken told CNBC last week he hopes to take his company public next year, also via a direct listing – possibly resulting in more options for investing in digital asset exchanges.

The listing is significant in that it marks the growth of the industry and its acceptance into mainstream business.

William Cong, an associate professor of finance at Cornell University’s SC Johnson College of Business

Cryptocurrency exchange Coinbase reveals it has reached $1.8 billion in total revenue as well as a massive 117% increase in monthly trading users in just one quarter.

A recent report by Coinbase, shows their first quarter estimated results, before next weeks Nasdaq listing. The increase in users was one of the factors propelling the approximate net income of $730 million to $800million.

Numbers Are Looking Good for Coinbase

• 56 million verified users
• Active users on Coinbase jumped from 2.8 million in the fourth quarter of 2020 to 6.1 million in the first quarter of 2021.
• Assets on Platform of $223 billion, representing 11.3% crypto asset market share (includes $122 billion institutional assets)
• Trading volumes topped $335 billion in Q1. For all of 2020, trading volume was $193 billion.

The report also gave an outlook for their monthly transacting users based on three different performance scenarios:

• In the “high” scenario, Coinbase would average 7 million Monthly Transacting Users (MTUs) if there is an increase in crypto market capitalization, and with moderate to high crypto price volatility, MTUs would continue to grow for the remainder of 2021.
• The “mid” scenario, Coinbase would average 5.5 million MTUs if the crypto market is flat, with a modest decline in MTUs from Q1 2021.
• The “low” scenario, Coinbase would average 4 million MTUs if market capitalisation decreases to that of the 2018 bear market, and “MTUs will decrease in a corresponding manner and end 2021 at similar levels to Q4 2020.”

Making Preparations for Retailers And Institutions

Coinbase’s technology and development expenses and general and administrative expenses are going to be between $1.3 billion to $1.6 billion, excluding stock-based compensation, in 2021 – showing lots of investment into the platform.

On the retail side, the company will be adding more assets and giving people more access to decentralized finance (DeFi) applications, Coinbase CEO Brian Armstrong said during Tuesday’s earnings call. Haas said she expects the average net revenue per user to reach new records in 2021.

For the last two years we’ve seen average net revenue per MTU [monthly transacting user] range between $34 and $45 per month.

Alesia Haas, CFO of Coinbase

On the institutional side, the company will continue to build out its prime brokerage offering and use its Bison Trails acquisition to create what Armstrong called the “Amazon Web Services for crypto.”

How do you have users doubling and growth three times that? It happens because volume per user also increased. That’s the increase in the price of bitcoin.

James Friedman, senior fintech research analyst at Susquehanna International Group

Sales and marketing are also planned to get between 12% and 15% increase. The numbers in this report seem to attest to a company that is thriving in the emerging crypto economy.

In an announcement by Coinbase their public direct listing of its Class A common stock was declared effective by the Securities and Exchange Commission (SEC) on April 1, 2021, and are set to be available on Nasdaq April 14.

In a direct listing, the issuing company forgoes selling new stock and instead allows existing stakeholders to sell their shares to new investors. The company has said it plans to register nearly 115 million shares.

The crypto exchange and custodian will also hold a first-quarter earnings call on April 6, to provide a financial outlook for 2021, Coinbase said in a press release.

Coinbase Has Made Major Stride Since Its Inception

The company was valued at between $90 and $100 billion in its final week of trading on Nasdaq’s private market. Further, a $100 billion debut would make Coinbase more valuable than traditional tech stocks such as Uber. The company has more than 43 million users trading digital assets in over 100 countries. The company also in 2020, brought in $1.3 billion in revenue and turned a profit of $322 million.

Based on the average price of $343.58 of shares traded on Nasdaq’s private market last month, CNBC calculated Coinbase CEO Brian Armstrong’s 39.6 million shares will be worth $13.6 billion, catapulting him into the billionaire rankings alongside individuals like Jeff Bezos, Elon Musk and Bill Gates.

The Commodities Futures Trading Commission (CFTC) also announced that it had reached a settlement deal worth $6.5 million with Coinbase. The settlement puts an end to the company’s claims reporting inaccurate transaction data, along with allegations of a former employee indulging in improper trading – allowing them to continue with their listing.

The listing had been pushed back from March however, the delay was anticipated, as direct listings are usually delayed.