Coinbase IPO: 7 Key Takeaways Investors Should Know
Cryptocurrency exchange Coinbase has filed for a direct listing to bring shares to the public market.
The company’s direct listing could value the company at $100 billion, according to Axios. Coinbase last raised funds in 2018 at an $8 billion valuation. In 2017, Coinbase was valued at $1.6 billion.
Shares of Coinbase will trade as ticker COIN on the Nasdaq.
The company aims to bring cryptocurrency-based financial services to anyone with a smartphone, representing a market size of 3.5 billion people.
Impressive User Base: Coinbase’s filing revealed how many users the company has: 43 million verified users. As of December 31, Coinbase had 2.8 million monthly transaction users.
In 2012, Coinbase had 13,000 users. The company has seen its user count grow over the years as cryptocurrency has gained interest from retail traders and institutions. The surge in Bitcoin's (CRYPTO: BTC) price over the last year has led to strong interest in multiple cryptocurrencies.
Key Player in Crypto Investing and Storage: Coinbase has a lifetime trading volume of $456 million. The company has over $90 billion in assets on the platform.
Coinbase supports 90 cryptocurrency assets for trading or custody ownership. Customers can invest in more than 45 cryptocurrency assets.
Trading volume on the Coinbase platform was $17 billion, $21 billion and $38 billion for fiscal 2018, fiscal 2019 and fiscal 2020 respectively.
Strong Growth Of Institutional Customers: While Coinbase may be seen as more of a play on the retail traders wanting to invest in cryptocurrency, Coinbase has seen strong growth of institutional customers as well.
The company ended 2020 with over 7,000 institutional customers. In 2017, Coinbase had 1,000 institutional customers.
“We provide hedge funds, money managers and corporations a one-stop shop for accessing crypto markets through advanced trading and custody technology,” the company said in the filing.
It was reported recently that Coinbase helped facilitate the $1.5 billion Bitcoin purchase that Tesla Inc (NASDAQ: TSLA) made.
Assets from institutional customers were up 590% from fiscal 2019 to fiscal 2020.
Revenue Growth: Coinbase had revenue of $1.3 billion in fiscal 2020, which was up from the $533.7 million reported in fiscal 2019.
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Subscription Revenue: Coinbase gets the majority of its revenue from cryptocurrency transactions. In 2020, 96% of revenue came from transactions. Subscription revenue was $45 million in fiscal 2020, up 126% year-over-year. Other revenue was $136.3 million in fiscal 2020, up 168% year-over-year.
“We are committed to growing more stable revenue from subscription products and services, and expect they will contribute a larger portion of our total revenue over time,” the company said.
Subscription products and service revenue grew 126% year-over-year.
Strong Focus on Cybersecurity: Coinbase mentions several times in the filing that it has a strong focus on cybersecurity.
“We have a trusted platform owing to our heritage of security and culture of regulatory compliance,” Coinbase said. The company said its investments in regulatory compliance and cybersecurity help earn the trust of customers.
The company has proprietary crypto compliance infrastructure in place.
Executives Will Control Vote: Coinbase Co-Founder and CEO Brian Armstrong owns 10.9% of Class A shares and 21.8% of Class B shares. Armstrong controls 21.7% of the voting power for Coinbase.
Silicon Valley heavyweight investor Marc Andreessen owns 24.6% of Class A shares and 14.2% of Class B shares. Andreessen has 14.3% of the voting power for Coinbase.
Coinbase executives and directors control 54% of the voting power for the company.
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