Following a year of massive growth in the value of Bitcoin, cryptocurrency exchange Coinbase Global plans to launch a highly anticipated initial public offering. The company plans to stage the Coinbase IPO April 14.
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Coinbase is the largest U.S. cryptocurrency exchange. It lists about 50 cryptocurrencies for trading. The company will be the first major crypto company to go public.
Bitcoin is the largest digital coin by market value, and has more than doubled in value so far this year. As a result, that helped lift the total value of the cryptocurrency market past $2 trillion, doubling in about two months amid surging institutional demand. Bitcoin accounts for about half of that $2 trillion.
Analysts expect the Coinbase IPO to give the cryptocurrency market increased validation.
Morgan Stanley now allows some of its wealthiest clients to add Bitcoin to their portfolios. In addition, Tesla now accepts Bitcoin as payment for cars. Mastercard (MA) and PayPal (PYPL) are embracing Bitcoin as well.
Coinbase IPO Is A Direct Listing
Coinbase is not doing a traditional IPO. It’s going public through a direct listing instead. The current owners of Coinbase stock will convert their shares to make them available for trading. Doing so lets them avoid large fees from investment bankers.
Direct listings are rare but have been used by big-name companies such as Spotify Technology (SPOT) and Palantir Technologies (PLTR).
The Coinbase IPO will trade on the Nasdaq under the ticker COIN. The company is selling 114.9 million shares directly to the public, according to the Coinbase IPO filing. It plans to reveal a reference price for shares a day before trading begins.
Analysts value Coinbase somewhere in the range of $70 billion to $90 billion, though some estimates go as high as $100 billion.
In a voluntary and preliminary first-quarter earnings report issued late Tuesday, the company said it verified 56 million people with Coinbase accounts. That’s up from 43 million at the end of December.
First Quarter Tops All Of 2020
Further, Coinbase’s first-quarter results surpassed all of 2020. The company reported revenue of $1.8 billion in the quarter, with net income of approximately $730 million to $800 million, according to the filing. Last year, it brought in $1.3 billion in revenue with a profit of $322 million.
Trading volume topped $335 billion in the quarter. For all of 2020, trading volume was $193 billion.
Total assets on Coinbase’s platform increased from $90 billion to $223 billion, a nearly 150% increase.
Its full-year outlook presented a range of possibilities, “given the inherent unpredictability of our business,” the company said in its report.
“To state the obvious, our business is hard to forecast,” Coinbase Chief Financial Officer Alesia Haas said after the earnings report. She cited the inability to predict the prices of Bitcoin and other cryptocurrencies.
About 96% of Coinbase’s revenue comes from transaction fees. It has several lines of business in addition to its exchange services. Among them is Coinbase Commerce, which provides online retailers with software that lets them accept cryptocurrency payments.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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