Everything you need to know about Coinbase
Joshua Warner April 12, 2021 1:51 PM
Coinbase has completed a direct listing and is now the largest publicly-traded cryptocurrency company. We tell you everything you need to know about the company and its listing.
When is the Coinbase IPO?
Coinbase completed a direct listing on the Nasdaq on April 14, 2021, becoming a publicly-listed business with the ticker ‘COIN’.
Notably, a direct listing meant the cryptocurrency exchange did not issue any new shares but simply listed its existing stock, allowing investors to sell some of their stake. Other big stocks that have gone public using a direct listing include Spotify and Palantir.
You can read more about the other top potential US IPOs that could happen in 2021 here.
How much is Coinbase worth?
It was a wild but ultimately successful listing for Coinbase. Shares were given a reference price, which tries to provide some sort of idea of where the stock will start trading, of $250 before it went public but Coinbase shares started trading at $381 per share when markets opened.
It was a wild first day of trading, with shares moving from a low of $310 to as high as $429 before finally settling at $328 by the end of the session. That meant Coinbase ended its first day as a publicly-traded business with a value of $85.7 billion.
That is over ten times the last valuation it achieved as a private company. Notably, at that valuation, Coinbase is now not only the largest listed cryptocurrency exchange but one of the largest exchanges to be listed full stop. InterContinental Exchange, which owns the NYSE, is currently worth around $66.5 billion while Nasdaq Inc is worth $26 billion.
The fact bitcoin climbed to a new all-time high and tested $64,000 earlier in the week certainly went in Coinbase’s favour.
How to trade Coinbase shares
You can trade Coinbase shares with City Index using spread-bets and CFDs, with spreads from 0.1%. Follow these east steps to get started:
- Open a City Index account, or log-in if you’re already a customer.
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
What is Coinbase?
Coinbase is a cryptocurrency platform that allows people to buy, sell and store cryptocurrencies such as bitcoin. The company believes cryptocurrency is ‘the future of money and a catalyst for creating an open financial system around the world’ and wants to allow everyone to be able to participate in the cryptocurrency space.
Coinbase has over 43 million registered users, 2.8 million of which use the platform on a monthly basis, in over 100 countries. It also has 7,000 institutions using its platform. It has facilitated over $456 billion worth of trades since it was founded and holds over $90 billion worth of assets on its platform.
How does Coinbase make money?
Coinbase has several income streams but 96% of its total revenue comes from the fees it charges each time somebody buys or sells a cryptocurrency and from margin fees. It also generates income by allowing other companies and partners to use its software.
It has made $3.4 billion in revenue since being founded in 2012.
The Coinbase platform is at the heart of the business, and this is complimented by Coinbase Pro, a distinct app targeting more advanced traders. It’s Wallet service stores cryptocurrencies for retail traders free of charge.
It also offers a Prime service that provides a turnkey solution for brokerages, exchanges and fintech companies that enables them to easily embrace cryptocurrencies, while its Custody service provides a way for them to store their cryptocurrencies in a ringfenced and independently-capitalised business. It is also empowering businesses by giving them the tech needed for them to accept cryptocurrencies as payment.
The company continues to expand into all areas of the wider cryptocurrency space in an effort to become a trusted market leader. For example, Earn is a site that allows people to earn cryptocurrencies by learning more about cryptocurrencies, blockchains and other related topics to encourage more people to adopt them.
It has also invested in over 60 ventures to help support the wider ecosystem, such as cryptocurrency miner Coinmine, crypto real estate investment platform RealtyBits, decentralised contract platform UMA and crypto collectibles app OpenSea. It has also worked with a number of other companies on an opensource project to launch a stablecoin named USD Coin, which is pegged to and fully backed by the US dollar.
Is Coinbase profitable?
Yes, Coinbase is profitable. The company’s revenue exploded in 2020 as it more than doubled to $1.14 billion from just $482.9 million in 2019. It posted an operating profit of $409 million last year from a $45.4 million loss the year before, and swung to a net income of $322.3 million in 2020 from a $30.4 million loss in 2019.
It is important to note that, as demonstrated by the vast growth seen in 2020, that Coinbase’s finances are likely to be as volatile as the cryptocurrencies it trades in, with most of its income relying on the volumes of trades being made. There has been a surge in interest in bitcoin and other cryptocurrencies this year, reflected by bitcoin’s rally past the $50,000 mark for the first time, all of which benefits Coinbase.
Coinbase had cash of over $1 billion at the end of 2020.
Who are Coinbase’s competitors?
There is no shortage of cryptocurrency platforms, with hundreds competing for volumes. Many try to cater to a broad market and offer a wide range of cryptos, while others focus on particular niches such as stablecoins.
The biggest and best rated exchange, according to CoinMarketCap, the most-referenced price-tracking website for cryptoassets, is Binance. Other major players in the space include Kraken, Huobi Global, Bitfinex, Bithumb, Bitstamp and Bittrex.
Data from CoinMarketCap suggests Coinbase is not one of the largest exchanges in terms of global trading volumes. However, it is thought to be the largest cryptocurrency exchange in North America. Plus, the site rates Coinbase as one of the top platforms using a scoring method that analyses ‘traffic, liquidity, trading volumes, and confidence in the legitimacy of trading volumes reported’.
What is Coinbase’s strategy?
One of the reasons Coinbase has become so well-known is because it has concentrated on becoming the most trusted exchange and having the easiest to use platform. It wants to do what the internet did for information by creating an open financial system that is ‘not controlled by any one country or company’, although there is an argument that the decentralised nature of cryptocurrencies is undermined by companies like Coinbase controlling trade.
Ultimately, Coinbase’s future will come down to the level of adoption of cryptocurrencies by people, businesses and institutions – all of which seem to have increasing appetite for cryptos as the years go by.
Coinbase is working toward goals to ensure that every payment in the world is as fast and cheap as sending an email and wants anyone with a smartphone to be able to access financial services or sell products freely without any middlemen.
It also plans to expand the depth and breadth of the assets it offers to its customers. This will include exploring how new assets can be ‘represented as crypto assets’.
Who are the directors of Coinbase?
Coinbase was founded by Brian Armstrong and Fred Ehrsam in 2012. Both of them are still on the board with Armstrong holding the role of chief executive and Ehrsam holding a non-executive position.
There are number of high profile non-executives on the board including venture capitalist Fred Wilson, crypto investor Marc Andreessen and the former CFO of Cisco Kelly Kramer.
- Co-Founder and chief executive – Brian Armstrong
- President and chief operating officer – Emilie Choi
- Chief product officer – Surojit Chatterjee
- Chief financial officer – Alesia Haas
- Chief people officer – LJ Brock
- Chief legal officer – Paul Grewal
- Executive vice president of engineering – Manish Gupta
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.