Coinbase Just Went Public
By the time you read this, the largest U.S. cryptocurrency exchange, Coinbase, should already be a publicly traded company.
Its market debut has been anticipated for Wednesday, April 14, on the Nasdaq under the ticker symbol “COIN.” The cryptocurrency company has decided to go public through a direct listing. Coinbase’s direct listing will be Nasdaq’s major direct listing.
It plans to register about 115 million shares of Class A common stock. A direct listing means that a company won’t be putting up any new stock, but is instead allowing existing shareholders to sell their shares to new investors.
Direct listings have been shown as a better way to go to public for some companies, especially those that are already well-known and established, and it just might be the best route for a company like Coinbase. It already has a lot of hype because it’s a pioneer in the space, being one of the first reliable cryptocurrency exchanges.
Coinbase is a San Francisco-based company. It was founded in 2012 as a place where users could buy and sell Bitcoin. The company has expanded itself since then. It offers retail users more options when it comes to trading cryptocurrency. It has added other cryptocurrencies beyond Bitcoin, as well as products for institutions and ecosystem partners.
In the company’s S-1, Coinbase describes its mission as follows:
We are building the cryptoeconomy — a more fair, accessible, efficient, and transparent financial system for the internet age that leverages crypto assets: digital assets built using blockchain technology.
We started in 2012 with the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin, the first crypto asset. We built a trusted platform for accessing Bitcoin and the broader cryptoeconomy by reducing the complexity of the industry through a simple and intuitive user experience.
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Back in 2018, the company began launching subscription products and services like the ability to store, stake, borrow, and lend through its platform. In addition to that, the company licenses analytics tools to law enforcement and financial institutions and provides software to help developers build blockchain applications so that merchants can accept cryptocurrency as a form of payment.
Coinbase has come a long way since 2012. When it emerged on the cryptocurrency scene, the crypto market looked very different. In the summer of 2012, Bitcoin saw highs slightly above $15; it didn’t rise above $15 again until the new year. Then, in 2017, it had a bit of a resurgence and reached a record high of $20,089 on December 17, 2017, according to Investopedia.com.
As of April 13, 2021, the price was around $63,180 per Bitcoin.
Now the company reports that it has 2.8 million users who are making monthly transactions. Coinbase has been able to grow its business and its platform over the last nine years — with the usual ups and downs of the cryptocurrency market, of course. In the second half of 2020, Bitcoin prices started to kick back up again and hit all-time highs.
In 2019, Coinbase reported $534 million in revenue, and a year later in 2020, it reported $1.3 billion in revenue — a 139% increase in just a year. The company released some preliminary results for the first quarter of 2021 and its revenue surged to $1.8 billion, which is 844% higher than revenue in the first quarter of 2020. In addition to that revenue growth, its verified users jumped to 56 million, up 65% year over year.
However, a word of caution for people interested in Coinbase’s direct listing: It’s going to be overvalued right now. There is a lot of hype involved in this listing. Everyone wants a piece because it’s a public debut that’s been highly anticipated. Coinbase could be a good long-term investment, but it could be equally beneficial to wait a bit before investing if you are interested. To let the hype die down a bit. It might even be beneficial to wait until Bitcoin prices decrease a bit.
Until next time,
Jennifer Clark
Pro Trader Today
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