Coinbase Global Inc — the holding company of the cryptocurrency exchange registered as Coinbase Inc was recently upvalued. Coinbase valuation reportedly hit USD 90 billion, before its upcoming IPO launch in March 2021, claims Bloomberg based on insider sources.
Reportedly, some of the registered Coinbase investors sold off their stake in the range of USD 350 to USD 375 per share during the Nasdaq Private Market auction. In the Sale Price History in the SEC filing document, it is set out that private investors sold over 2 million shares at USD 28.83 in the third quarter of 2020.
In the SEC Filing on 25 February 2021, the crypto exchange abstained from specifying its estimated IPO price. Instead, the company opted to file the registration with a placeholder value of USD 1 billion.
In May 2020, when the Covid-19 pandemic crisis was at its peak, the company declared itself as a “Remote-First” entity, i.e., a business entity which does not have a physical address and operates as a distributed enterprise.
Factors influencing Coinbase valuation
A proposed Coinbase IPO was earlier announced on its official blog in late January 2021.
The private auction, that ended last week, was the final opportunity for the registered investors to offload their shares before the planned direct listing in late March, according to Bloomberg. The publication also hinted that NASDAQ may use these private trading activities to determine a reference point for the IPO price.
Coinbase has managed to integrate its platform with over 15 blockchain protocols.
One of the key risk factors for the exchange is how well they will be able to safeguard customer’s funds and crypto assets against cybercrimes and online attacks. Supposedly, it has also factored in the decentralized nature of the crypto economy to beef up its cybersecurity and cryptography technology and implementing transaction monitoring systems that allow real-time analysis of transactions in the blockchain network.
From listing various cryptocurrencies in its own trading platform, Coinbase is now upping the ante by filing for a direct listing of its own stock. The cryptocurrency exchange will list its Class A common stock on the NASDAQ Global Select Market. These shares will trade under the symbol “COIN”.
It is important to understand the impact of direct listing on NASDAQ Global Markets. The Coinbase IPO will not create new shares to raise funds. However through the direct listing process, it hopes to improve the liquidity position of the existing investors. In simple terms, the listing would create a market that facilitates these existing registered stockholders to sell their stake to the general public.
In the past, many technology companies like Palantir, Slack Technologies, and Spotify have opted for the direct listing on the New York Stock Exchange. But Coinbase is the first crypto centric technology company to do so on NASDAQ.
To facilitate the IPO, Coinbase will engage Goldman Sachs, J.P. Morgan, Allen & Co and Citigroup as its financial advisors.
Coinbase growth story
Coinbase claims that its addressable market includes anyone with a smartphone.
From its inception in 2012 to December 2020, Coinbase’s total trading volumes are close to USD 456 billion in aggregate. The assets on its platform is approximately USD 90 billion. The exchange’s total revenue in 2020 rose to USD 1.28 billion, being 2.4x times higher than the total revenue of 2019 being USD 533 million. The net income per diluted share (diluted earnings per share) for 2020 was USD 1.40 compared to a net loss per share of USD 0.50 per share in 2019.
Coinbase boasts of catering to a variety of users in the crypto economy. This includes approximately 43 million individual users, 7,000 institutional investors and 115,000 ecosystem partners like merchants and developers — spread across more than 100 countries. In 2020, the transacting users were estimated at approximately 2.8 million per month.
Through 2020, about 21% of the retail users who invest in digital assets also opted for additional services like staking, distribution and other non-investing products.
Coinbase declared that it would announce further updates on any material information to the public through different mediums. These include SEC filings, Coinbase investor relations page on the website, press releases, public webcasts and conference calls. It will also publish information on social media platforms like Twitter, Facebook, LinkedIn as well as its YouTube channel.
The Coinbase IPO is an important step for the crypto industry's mass adoption in the general public.