Welcome to The NASDAQ, Coinbase
Bitcoins placed beside Coinbase App on iPhone, illustrating one of the largest Bitcoin providers, photographed in Cologne, Germany, 14th of April 2021
April 21, 2021
Coinbase, an American cryptocurrency exchange platform that has been gathering a lot of steam in the past few quarters, went public officially on the NASDAQ on April 14, 2021. It is a company that helps crypto asset enthusiasts buy, sell, and store crypto like bitcoin and ethereum. Making money on fees and helping Americans trade crypto is just one of their goals, as they have a vision to create a new “open financial system”.
One of the biggest flexes the company has on its competitors is that it’s never been hacked – and that’s obviously extremely important for industries such as this. Coinbase operates in 32 countries today. The ticker “COIN” opened at a share price of $381, which was 52% higher than the reference price of $250. The Coinbase stock later closed its first day as shares were trading at $328. Coinbase had a valuation of $85.7 billion based on outstanding shares, which is more than ten times larger than their previous private valuation. This valuation was talked about by many investors to be reminiscent of Facebook and Airbnb.
The Coinbase IPO was the biggest direct listing ever by market cap, and one of the largest for NASDAQ. The President of the NASDAQ was brought onto CNBC to talk about the IPO, saying “It was a very smooth process and as clearly direct listing are here to stay.” On a side note, he talked about future listings, and had said that 70% of its upcoming future listings are in the technology sector, which makes things look very good for Coinbase, as it shows demand is clearly high enough.
Though this is a great achievement for Coinbase and its 1,700 employees, this was an even better day and time for crypto and crypto investors. Many people were wondering what this might look like, having a crypto exchange company launch publicly, as many people are still very shady and skeptical about cryptocurrency becoming its own monster – which it already almost has. There is a division in the American markets as almost every American business still operates on the gold backed U.S. dollar, though you have millions of people investing large amounts of money into cryptocurrency. Coinbase is a perfect “gateway” server for the crypto industry. It is a company that has been around since 2012, and has a very easy to use interface that many people can learn and start trading with ease.
Looking into the first day – you would think even the Coinbase founders, Brian Armstrong – former trader at Goldman Sachs and software engineer for Airbnb, and Fred Ehrsam – also a former exchange trader at Goldman Sachs, would say it was a success. At a surface level, this can be attributed to a very large amount of operating leverage within the company.
The majority of their revenue is driven through fees – which is fees in cryptocurrency. The company saw a large spike in profits during the IPO, as stock price shot up upon release as well as fees being collected from new members signing up and trading through Coinbase. Coinbase has a reported 56 million users as of its IPO, this is the backbone to what drives its estimated $730 million to $800 million in net profits – with revenue being nearly $2 billion.
Jalak Jobanputra, founder of Future\Perfect Ventures commented on the IPO of Coinbase saying “It blows a lot of the traditional tech and finance companies out of the water,” he went on to say “It wasn’t that long ago that people just thought crypto wasn’t big enough.”
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