COINBASE DEBUTS ON NASDAQ

Upon its stock market debut on Wednesday, 14th April. 2021, Coinbase raised an $85 billion valuation, closing at $328 at the culmination of it’s opening day of trading. Sarah Kunst, the managing director of Cleo Capital talked about Coinbase’s debut.

“The thing that is not debatable is that this is a huge success story for crypto overall, and what we’re seeing here is the first major IPO, the first IPO ever really, for a crypto company, for a crypto exchange in the U.S. And I think that no matter what happens with their stock price minute to minute or over the next few quarters, this milestone is the first of many and crypto companies are here to stay even in the public markets.”

Being the first significant bitcoin-based company, Coinbase’s shares on the Nasdaq Global Select Market commenced at $381 and climbed as high as $429.54 in the initial minutes before remaining at $328.28. It is to be noted that all cryptocurrencies, not too long ago, were disparaged by sceptics in the financial world. Coinbase’s debut on Nasdaq seems like a big victory for cryptocurrencies and a significant start. Emily Parker, TV co-anchor at CoinDesk sees it as a triumph for the crypto industry, but still views challenges ahead.

“It’s hugely important for the crypto industry, and that’s why this listing is so important, because Coinbase in many ways is seen as a gateway to the mainstream world. Coinbase is relatively easy to use, it’s trusted, so it’s for new investors who want to get into the crypto market. But … that could actually be a risk to Coinbase over the long term because Coinbase is going to start seeing more competition from banks. If there is an ETF, will that pose a risk to Coinbase? If a bank allows you to start buying crypto out of your checking account, will people still use Coinbase? So interestingly as crypto gets more and more mainstream, Coinbase will have to maintain that first-mover advantage.”

Coinbase started in 2012 in San Francisco and enables individuals and corporations to buy and sell several cryptocurrencies, some of which include the more prominent Bitcoin and Ether. Coinbase earns a transaction fee and has been on the up, as more investments in assets have raised prices further. This week, Bitcoin prices soared to a new high of $64,000 in anticipation of Coinbase’s listing. By Wednesday, the price of Bitcoin settled back to $61,939. Coinbase has amassed an excess of $500 million via venture capital investors, whom has previously valued it at $8 billion. Most prominent shareholders include Andreessen Horowitz, Tiger Global and Paradigm, a crypto-based investment firm.

According to Bobby Cho, a CMS Holdings partner foresees a lot of opportunity for the company. “There’s this opportunity for Coinbase to access all different types of traditional products. Two years ago, I believe, they bought Keystone, a broker dealer, so that’s in the works, and there are other ways that they haven’t even tapped into in terms of monetizing how current exchanges … are currently making money, such as market data. At this point, market data is free, but at some point, they’re going to start to latch on to some of those revenue streams, and I just look at all of that as a growth opportunity here.”

One factor that has driven Coinbase is explained by Michael Bucella, a BlockTower Capital partner, “There is enormous operating leverage within Coinbase. If you think about their fee revenue model, it’s primarily crypto-driven, so fees are collected in crypto. So, you had an acceleration increase in fees, plus the acceleration in price gives you this almost levered beta to this space.”

Fortunate father to three beautiful girls. Curious, passionate and driven towards innovation and entrepreneurship. Believer in Greater Good!