The Coinbase list is set to take advantage of cryptocurrency bullfighting
Coinbase became the leading company in gaining the trust of beginner cryptocurrencies. Then comes the stock market.
The nine-year initial list of Nasdaq exchanges on Wednesday will become the first cryptocurrency company to be marketed in the U.S. on Wednesday, a milestone that has created excitement in the already rich digital assets market.
The challenge is for few to know how the company is valued, which has unstable transaction revenues in the lightly regulated markets for the vast majority of the business.
“It’s a test of Rorschach that people believe in crypto,” said IVP partner Tom Loverro, who was valued at $ 1.6 billion when he first invested in 2017.
Coinbase manages the largest cryptocurrency exchange in the U.S. and has funds for more than 43 million customers, taking advantage of the demand for an easy storage solution in the early days of bitcoin.
The company’s list comes in the price of cryptocurrencies during the running of the bulls, as bitcoin has doubled since January to cross the $ 60,000 barrier. Investors have also turned to new technologies, offering electric vehicle companies and speculative assets such as non-fungible tokens or NFTs.
A tough combination could create volatility in Coinbase shares, even if the company has chosen a direct listing, an alternative to initial public offerings that often involve small price changes on the first day of trading.
In private exchanges, Coinbase shares have traded at prices between $ 200 and $ 375 this year, according to the company’s prospectus.
At the top of that stretch, Coinbase would have a capitalization of nearly $ 74 billion, making it more valuable than the major New York Stock Exchange company. Coinbase’s valuation would be approximately $ 100,000 million when it comes to including options and other types of stock-based rewards.
That valuation would be a rich reward for Coinbase, which previously valued private investors at $ 8 billion in 2018. It would also cement the company’s founders Brian Armstrong and Fred Ehrsam as multimillionaires, and provide such returns to first-time investors. Andreessen Horowitz and Union Square Ventures.
Coinbase has become the largest cryptocurrency company in the U.S., paying close attention to regulators and maintaining a secure service while avoiding scams that have prevented other trading sites. The company estimates that it oversees about 11% of the total cryptocurrency, with $ 90 billion in assets at the end of last year.
Active users of cryptocurrency have said they take advantage of Coinbase’s status as a trusted intermediary by charging high fees for basic functions such as storing and trading digital assets. Coinbase reduces the average by more than 50 points per transaction when looking at the company’s prospectus.
“The question for consumers and ultimately for institutions is how much you are willing to pay to take care of your assets,” Loverro said. “People generally act rationally, and there’s a reason people pay what seems to be a premium for using Coinbase.”
Due to the nature of cryptocurrency markets, Coinbase has few parallels in traditional finance. He acts as a broker, such as Charles Schwab; it stores the assets of large customers, similar to State Street; makes the exchange; and sometimes acts as a creative market.
Cryptocurrency investors have said that Coinbase does not usually offer the best liquidity or trading price, and that its advantage lies in the value of its clients ’accounts. “We tend to think of it as a Coinbase exchange because they have an order book, but it’s not the most important feature,” said Max Boonen, founder of the B2C2 marketplace.
Coinbase is the U.S. exchange oligopoly that dominates its close relationship with regulators because of its high trading volume and relatively secure reputation, said Carol Alexander, a professor of finance at the University of Sussex, who has studied cryptocurrency markets.
“Coinbase is definitely the leader,” Alexander said. “As the coins they can offer spread, it makes it harder to catch up with other exchanges.”
The company’s height means that its finances have closely followed changes in bitcoin and other cryptocurrencies.
Transaction rates accounted for more than 96 percent of Coinbase’s net revenue last year, with rates made with bitcoin accounting for 44 percent of the business, Coinbase said.
The company’s fortunes have risen in the last trade boom. In the first quarter, which provided adjusted revenue of $ 1.1 million as a result of revenue of $ 1.8 million, it had earned nine times a year earlier. But Coinbase has reported a three-quarter drop in revenue since 2019.
Coinbase has also encountered regulatory issues. Last month, he paid $ 6.5 million for allegedly falsifying trade data and allegedly manipulating former workers in the laundering trade.
Recently, Coinbase has tried to attract large institutional investors, who tend to be non-weak customers. Last year, MicroStrategy helped software company buy $ 425 million in bitcoin to keep its balance sheet. Third Point, a $ 17 billion hedge fund, uses Coinbase to do just that care services.
Gil Luria DA Davidson, director of research at Brokerage, said Coinbase’s business will be a growing marketplace for the growing market of institutional buyers and sellers. “Coinbase is catching part of that right now,” he said.
DA Davidson has set a price of $ 440 for Coinbase shares, more than doubling the initial calculation after the company released first-quarter calculations.
Meanwhile, the competition is on the rise. Vlad Tenev, Robinhood’s CEO of the no-fee trading app, said he is working on a cryptocurrency portfolio offering that will allow the company to compete more closely with Coinbase.
The forecast is that Coinbase will have to reduce its fees for its major retail customers, consuming the company’s profits.
“It’s totally unthinkable that the retail market will continue to pay much more than organizations do,” said Dave Weisberger, CEO of CoinRoutes, a software company that analyzes data on cryptocurrency exchanges. “But it’s likely the business will grow more than size. The question is which happens faster.”