Coinbase is a leading cryptocurrency exchange that has filed for a direct listing which will soon bring shares to the public market.
Axios anticipates Coinbase’s direct listing will lead to the valuation of the company rising to $100 billion. The last time funds were raised was back in 2018 at an $8 billion valuation. While previously in 2017, the company’s valuation was around $1.6 billion.
Coinbase shares will trade as ticker symbol COIN on the Nasdaq.
This technology company is innovating new ways to bring cryptocurrency-based financial services to all smartphone users, as the company currently holds a market size of 3.5 billion people.
Coinbase’s Large User Base
Filing from Coinbase reveals that the company has 43 million verified users. As of December 31, their monthly user transaction had grown to 2.8 million.
In 2012, Coinbase only had 13,000 users. The company has experienced its user count rapidly expand over the years, following a growing pattern of interest
among retail traders and institutions in the cryptocurrency marketplace. Bitcoin’s (CRYPTO: BTC) surge in price over the last year has also led investors to take a strong interest in multiple cryptocurrencies.
Market Power in Crypto Investing and Storage
Coinbase’s lifetime trading volume sits near $456 million. Comparably, the company holds over $90 billion in assets on the platform alone. The platform currently supports 90 cryptocurrency assets for trading or custody ownership. This allows customers access to invest in more than 45 cryptocurrency assets. Trading volume on the platform was $17 billion for fiscal 2018, $21 billion for fiscal 2019, and $38 billion for fiscal 2020 respectively.
Solid Growth Of Institutional Customers
While Coinbase is primarily used by retail traders wanting to invest in cryptocurrency, it has seen solid growth of institutional customers as well. 2020 ended with just over 7,000 institutional customers. In 2017, the company 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,” Coinbase said in the filing.
Assets from institutional customers were up 590% from fiscal 2019 to fiscal 2020.
Revenue Gains
Revenue has seen gains of $1.3 billion in fiscal 2020, which increased from the $533.7 million reported in fiscal 2019.
Recent reports indicate that Coinbase helped expedite the $1.5 billion Bitcoin purchase that Tesla Inc (NASDAQ:TSLA) made.
Transaction Revenue
The company earns the majority of its revenue from cryptocurrency transactions. In 2020, 96% of earnings came from transactions. Transaction revenue was $45 million in fiscal 2020, up 126% annually. Another revenue was $136.3 million in fiscal 2020, up 168% annually. Subscription products and service revenue grew 126% annually.
“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,” Coinbase said.
High Priority on Cybersecurity
Noted several times in the filing that it has a high priority on cybersecurity, Coinbase has a proprietary crypto compliance infrastructure in place.
“We have a trusted platform owing to our heritage of security and culture of regulatory compliance,” the company said. They Also mention how its investments in regulatory compliance and cybersecurity help gain the trust of customers.
Executives Control Vote
Co-Founder and CEO Brian Armstrong owns 10.9% of Class A shares and 21.8% of Class B shares. This means Armstrong controls 21.7% of the voting power. Heavyweight investor Marc Andreessen of Silicon Valley owns 24.6% of Class A shares and 14.2% of Class B shares. Therefore, Andreessen has 14.3% of the voting power for the company. Directors and executives combined control 54% of the voting power for the company.
These seven takeaways make Coinbase a very attractive investment and alternative to outright Ownership in other crypto assets such as BTC. But as always before you invest please do your own due diligence, consult your own financial advisor and always invest based upon your won risk appetite. Thank you for reading.
