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Coinbase files for a direct listing on NASDAQ with its valuation expected to be over $100 billion

Among the largest cryptocurrency exchanges – Coinbase – has been in the news for a while now as it announced its intentions of going public. Its CEO Brian Armstrong had announced in December 2020 that the exchange would be opting for an IPO. Now, the company has filed its S-1 registration with SEC (Securities and Exchange Commission) as it’s going for a direct listing.

The S-1 notes that Coinbase is offering its “Class A common stock for sale via a direct listing”. The exchange plans to list itself under the symbol COIN. According to Axios, ahead of the IPO, Coinbase’s valuation has soared over $100 billion as a recent batch of 127,000 shares were sold on last Friday at $373.

Coinbase IPO: the numbers

The company has mentioned that it has roughly 43 million retail users, 7,000 institutions, and 11,5000 ecosystem partners in over 100 countries. Interestingly, while retail users started using Coinbase for its simplicity, in 2020, more transactions were done by institutions on the platform.

Trading Volume and Crypto Asset Volatility. Source: Coinbase S-1

From its inception till December 31st, 2020, Coinbase has executed over $456 billion in trading volume, while the assets stored by itself are worth $90 billion. Talking about revenue, it has generated more than $3.4billion, which has largely come from transaction fees. In 2020 itself, Coinbase achieved a net profit of $322million.

The exchange goes on to mention that a majority (in fact, 96%) of its revenue comes from transaction fees.

Coming to the asset holdings of Coinbase, it has $130 million of Bitcoin, over $49.9 million worth of the stablecoin dubbed USDC which is pegged to the US Dollar, $23 million of Ethereum, and $34 million of other cryptocurrencies.

Coinbase IPO: who are the biggest shareholders?

Coinbase’s CEO Brian Armstrong holds only 10.9% of the Class A shares, however he does own a significant number of Class B shares (21.8%), which are for voting rights. His co-founder and currently the GP at Paradigm Capital, Fred Ehrsram owns 11.4% of the Class A stock and 9% of the Class B shares.

Coinbase shareholders. Source: Coinbase S-1

The biggest shareholder of Coinbase is the venture capital firm A16z, with its co-founder Marc Andreessen being on the board, holding 24.6% of Class A shares, and 14.2% of Class B shares.

Coinbase IPO: risks and future plans

Considering cryptocurrencies, as an asset, is known to be volatile, Coinbase has given the warning that it may impact its own operating results too. It goes on to state that the price or volume of cryptocurrencies declining will affect its finanical condition too.

Coinbase aims to improve its services revenue going forward. The platform also highlighted that it expects to grow revenue from ecosystem products with a fixed fee for the usage of the product / service.

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