Coinbase Global Inc. has filed with the US SEC for a direct listing on Nasdaq, and it has the crypto market excited, and the traditional markets are taking notice, as the financial statements of the company revealed that the exchange has been making a lot of money.
Interestingly, a good majority, 85% of the 130 companies that went public in the US last year, was unprofitable. But with Coinbase, the matter is altogether different.
San Francisco-based reported revenue of $1.28 billion in 2020 versus $533.7 million in 2019.
Given the record trading volume, the number of new users, as well as the crypto trading platforms it has been acquiring in just the two months of 2021 amidst the wild bull run, the revenue in the first quarter will be off the charts and is expected to surpass $2 billion, for the exchange.
This puts Coinbase with over a $100 billion valuation, more valuable than CME, ICE which owns the NYSE, CBOE, and Nasdaq.
This will certainly be making Coinbase CEO Brian Armstrong, and its top executives, rich by billions of dollars as a result of this valuation, which would make it one of the biggest companies to go public since the social media giant Facebook.
The CEO owns 21.8% of the company’s voting power, followed by a16z’s Marc Andreessen at 14.2%, who owns twice as many shares as Armstrong, and co-founder Fred Ehsram 9%. In total, the 11-member board has the majority voting control.
Source: SEC Filing
To be listed under the ticker COIN, Goldman Sachs, JPMorgan, and Citigroup are the market makers who are also the advisors on the transaction with another addition Allen & Co.
One of the largest exchanges, Coinbase, reported 43 million verified users, steady growth from 23 million in Q1 of 2018. As for the transacting users, in Q4 of 2020, it was 2.8 million, nearly the same as 1Q18 at 2.7 million.
Unlike the transacting users, in 1Q18, when the market topped, Coinbase recorded $56 billion in trading volume, but during the last quarter, it was $89 billion.
The big difference has been in Coinbase’s volume by customer segment, as back in Q1 of 2018, retail dominated the exchange with more than an 80% share; it has completely changed to institutional accounting for 64% of volume in 4Q20.
Exciting & Embarrassing
Crypto Twitter (CT) has been excited about this development as Matt Huang, Co-founder at Paradigm, previously a partner at Sequoia, congratulated the company, “The Coinbase S-1 is just one step along the way toward building a legendary company… but still, one hell of a milestone.”
“This represents another major milestone in the development of the cryptocurrency industry,” tweeted Jay Hao, CEO of crypto exchange OKEx. “Coinbase’s S-1 filing will undoubtedly have a profound impact on the crypto market and usher in a new era of mainstream crypto adoption,” he added.
What really set off the CT was the fact that Coinbase, which started in 2012 when the price of BItcoin was about $5, holds only $130 million worth of BTC.
Square’s recently announced the purchase of $170 million worth BTC is more than this, and Coinbase’s BTC stash is nowhere even near Michael Saylor’s $2.171 billion bet on Bitcoin.
Besides having 55% of their modest crypto treasury, separate from cash and cash equivalents at $1.1 billion, the company has $24 million (10%) in Ethereum ETH -5.02% Ethereum / USD ETHUSD $ 1,446.93
-$72.64-5.02% Volume 31.49 b Change -$72.64 Open $1,446.93 Circulating 114.84 m Market Cap 166.16 b
6 h Crypto Hedge Fund Arca is the Latest to Join the Crowd of Bitcoin Trust Issuers 6 h Coinbase Going Public Is A Watershed Moment for the Cryptocurrency Industry 7 h 1Inch Decentralized Exchange to Transition to Binance Smart Chain as Ethereum Exodus Begins , $49 million (20%) in USDC stablecoin USDC -0.02% USD Coin / USD USDCUSD $ 1.00
$0.00-0.02% Volume 2.46 b Change $0.00 Open $1.00 Circulating 8.59 b Market Cap 8.59 b
6 h Coinbase Going Public Is A Watershed Moment for the Cryptocurrency Industry 1 w Private Aviation Company Sees 20% Revenue Coming from Bitcoin Paying Users 1 w You Can Now Buy Bitcoin with Apple Pay as BitPay Adds Support , and $34 million (15%) in other altcoins.
Given that Coinbase is a cryptocurrency-centered company, some even called this crypto stash “embarrassing.”
But many expect Amrstong, Ehsram, and other early backers to own heavy Bitcoin BTC -4.15% Bitcoin / USD BTCUSD $ 46,344.77
-$1,923.31-4.15% Volume 351 b Change -$1,923.31 Open $46,344.77 Circulating 18.64 m Market Cap 863.85 b
5 h A “BIG Deal:” Stone Ridge Files to Add Bitcoin to its Diversified Alternatives Fund 6 h Crypto Hedge Fund Arca is the Latest to Join the Crowd of Bitcoin Trust Issuers 6 h Coinbase Going Public Is A Watershed Moment for the Cryptocurrency Industry and crypto bags personally.
Coinbase going public, meanwhile, is also expected to be bullish for other exchanges and their tokens. “I think the bigger the Coinbase IPO gets, the better for exchange tokens. Doesn’t matter that owning an exchange token ≠ actually owning stock. Just matters that a lot of people will feel priced out of coinbase” noted trader DonAlt.
As we reported, US-based Kraken is also planning to raise funds that could more than double its valuation and surpass $20 billion.
Interestingly, in its filing with the SEC, Coinbase also mentions that they do not maintain a headquarter as of May 2020 and that they have become a remote-first company.