In March, a private auction on the Nasdaq Private Market set the preliminary price of Coinbase shares at $350 each. This put the company’s tentative valuation at $90 billion. Nasdaq more recently set the stock’s reference price at $250.
Watershed moment for crypto
A cryptocurrency exchange getting listed on a public stock exchange is a major indicator of mainstream acceptance for the industry.
This acceptance could lead the way for more companies to adopt cryptocurrencies in their operations. More companies could soon add bitcoin (BTC) to their balance sheet, or pay for salaries or services in crypto.
Major influencers in the cryptocurrency sphere, such as Binance CEO Changpeng Zhao and FTX CEO Sam Bankman-Fried have both lauded Coinbase’s public listing. Both influential figures seem to feel Coinbase’s valuation is quite low. Although this makes it initially more attractive, they anticipate its success will increase demand for similar crypto listings.
Despite this groundbreaking moment, experts expect that the stock may struggle with volatility. Being a pioneer, the stock will likely trade similarly to the way cryptocurrencies have.
Coinbase has seen a massive amount of growth over the past few months alongside the development of its public listing. One reason for this could be due to the increased attention Coinbase received from the pervasive media coverage. Another could be the greater adoption of cryptocurrencies generally. The company currently has at least 56 million users.
The company has also grown tremendously in terms of revenue. In its most recent quarterly report, the San Francisco-based exchange booked profits between $700 million and $800 million. These Q1 profits are double the company made in the whole of 2020.
CNBC reported that Coinbase generated 96% of its revenue through transaction fees. Coinbase CEO Brian Armstrong was asked whether going public might see the company struggle with more competitors who may try to undercut these fees.
Although Armstrong said he didn’t expect to see any margin compression in the short-to-mid term, he revealed that the company is investing in several different revenue streams. He anticipated that in five to ten years these would make up 50% or more of the company’s revenue.