As the cryptocurrency market value reaches $2 trillion, Coinbase reports staggering revenues ahead of its direct listing.
On Tuesday, Coinbase said that its first-quarter revenue increased roughly 900% from the same period last year as a result of a rally in the price of Bitcoin. The news has excited investors ahead of Coinbase’s market debut on the Nasdaq next week.
The cryptocurrency exchange platform follows a long line of recent tech companies with huge valuations making their market debut, each of which seeks to capitalize on growing interest in the technology sector. However, Coinbase has opted to go public via direct listing instead of the traditional IPO route.
The crypto platform says it plans to register almost 115 million shares of Class A common stock in a direct listing. This means that it won’t be selling any new stock and instead will be allowing existing stakeholders to sell their shares to new investors.
When is Coinbase going public?
Coinbase is expected to begin trading on Wednesday, April 14, on the Nasdaq exchange under the ticker symbol ‘COIN.’
What price is Coinbase going public at?
Experts predict Coinbase to reach a $100 billion valuation but private share transactions have indicated closer to $70 billion. Coinbase said it will issue a share price reference next Tuesday, April 13.
Coinbase said that revenue in Q1 of this year increased to $1.8 billion, up from the $190.6 million in the same period in 2020. Net income climbed to between $730 million and $800 million, up from the $31.9 million a year ago. Coinbases also added that it had 56 million verified users on its platform, compared to 34 million the previous year. The San Francisco-based company said that these results were preliminary and unaudited.
Coinbase said that its trading volume reached $335 billion in Q1, up from the $30 billion worth of trades in the first quarter of 2020 — a sign of the surging interest in the cryptocurrencies market.
The company does hold cryptocurrency assets in its balance sheet, with these values fluctuating significantly due to the volatile markets. In general, the business also relies heavily on the overall performance of the crypto market which brings a certain level of risk to investing in the company.
Coinbase’s growth potential
Coinbase generates revenue from the sale of cryptocurrencies on its platform, which makes it highly profitable as digital currency trading has been booming lately. For example, Bitcoin’s price has surged to roughly $58,000 per token, with experts predicting that it could hit $100,000 this year. This sets Coinbase up nicely to benefit from plenty of transaction fees.
The company has also begun expanding its crypto exchange lately by allowing its users to trade other digital assets such as Cardano.
Cryptocurrencies have become very popular lately with many investors buying different coins and this growing trend has allowed Coinbase to expand quickly. If digital assets become the future of money, which many believe they will, Coinbase would be a great investment. However, there is still a lot of divided opinions on the subject, and heightened regulation on the currencies is expected which may damage Coinbase’s business.
A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free trial now!
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.