We finally get to see some of the inner workings of Coinbase for first time since they submitted paperwork for their long-awaited public listing.
Coinbase generated $1.3bn in revenue last year, up from $534m the year prior, enabling the company to turn a profit of $322m in 2020 after losing $30m in 2019, according to a filing with US securities regulators.
I have been waiting for Coinbase's public debut, because they are blazing the trail for exchange direct listing that will bring further legitimacy and adoption to the crypto space. It's also projected to be one of this year’s largest new tech listings and would mark a milestone for emerging sector. Coinbase is aiming to list in late March.
The listing market has been on fire with investors recently buying up shares in unicorns like Airbnb and DoorDash. The listing of unicorns such as Coinbase is worrying some as they are comparing this surge in listing that was a similar trend in the 2000 dotcom bubble.
Coinbase filed for a direct listing rather than a traditional initial public offering, meaning it will not raise additional capital when it goes public. From the amount I pay them in trading fees I don't think they need to raise any more capital either...
When discussing the listing, Brian Armstrong, chief executive of Coinbase, warned that prospective investors should expect volatility in the company’s financials. Any one involved in the crypto space understands this, but I cant wait to see what traditional markets think of the volatility.
“We may earn a profit when revenues are high, and we may lose money when revenues are low, but our goal is to roughly operate the company at break even, smoothed out over time, for the time being,” Armstrong wrote in a letter attached to the filing.
Almost all of Coinbase’s revenue came from transaction fees last year, it said in the filing, underlining the company’s dependence on cryptocurrency trading fees.
Personally, their fee structure is high and even worse if you are buying on Coinbase.Thise fees have led to a roughly $100bn valuation, according to people briefed on the trades, up from $8bn less than three years ago.
The real question is what price are they going to list their shares at? I wish they would allow users of their product to purchase share before they list. It's the least they can do for the highway robbery of their fee structure.