8 expert predictions ahead of Coinbase’s hotly anticipated IPO next week

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Coinbase’s debut on the Nasdaq on April 14 has been eagerly awaited, especially by cryptocurrency bulls who view the listing as a milestone for the digital currency ecosystem.

Adding to the excitement, the cryptocurrency trading giant reported a whopping $1.8 billion revenue in the first quarter of the year on Tuesday, compared to the $1.3 billion for all of 2020.

On the back of the eye-popping earnings, DA Davidson analyst Gil Luria increased his price target by 125% to $440 from $195. The analyst derived his adjusted price target from a 20x multiple based on the company’s expected revenue this year.

The record-breaking quarter for Coinbase moved in lockstep with bitcoin’s surge, which thus far has soared more than 100% year-to-date and 600% in the past 12 months.

While bitcoin’s rally has stalled in the past days, it tested the $60,000-level record last week after Visa enabled the use of USD Coin and CME Group revealed it is expanding its suite of crypto offerings with micro bitcoin futures. On Thursday, billionaire Rick Caruso’s real estate firm announced that it will start accepting bitcoin as rent payment – a first in the residential and retail real estate space.

Coinbase, the largest cryptocurrency exchange in the US, offers a wide range of products and services from trading and custody services to offering a stablecoin pegged to the US dollar. It has 43 million users in more than 100 countries.

Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities

Here’s what eight crypto-industry experts had to say about Coinbase’s public debut:

“The direct listing of Coinbase is a huge market signal, however, we’re yet to see whether the long-term effect on the crypto industry will be positive or negative … We are big fans of what Coinbase has done to date, but we worry about the centralizing effects of the concentration of users on a single platform, negating the true benefits of decentralization.” – Alberto Jauregui, growth lead of Pocket Network, a blockchain data ecosystem

“The Coinbase listing is a huge step for the digital asset industry from both a mainstream adoption and regulatory point of view, signifying the acceptance of cryptocurrency business in traditional finance. Other exchanges following in Coinbase’s footsteps are entirely based on their readiness to go public. This will pave the way for Coinbase’s competitors to join the IPO movement. Kraken will most likely be next.” – Gunnar Jaerv, COO of First Digital Trust, a leading digital asset custodian in Hong Kong

“The success of Coinbase and its direct listing will bring on the next wave of new users to cryptocurrencies by continuing to solve the challenges of owning, storing, and providing custody to digital assets. This public listing will also have an enormous impact on the entire digital asset industry by opening the gate to further Wall Street and institutional investment and confirming that the future of finance is decentralized.” – Leo Cheng, co-founder and project lead at C.R.E.A.M. Finance, a decentralized lending protocol

“Going public is stepping into the big leagues. Crypto is becoming part of the traditional finance sector … This level of adoption seemed like a dream scenario just a year ago. A lot of users still keep funds on Coinbase and look at it as merely a trading platform. But more are beginning to wake up and understand that Coinbase is an important gateway to getting started in the crypto sector.” – Kadan Stadelmann, CTO of Komodo, an open-source technology workshop and blockchain solutions provider

“When we entered into the market three years ago it was a new and novel industry, everyone had to wrap their heads around what we were doing as a business, the terminology we were using, and the potential value a bitcoin mining operation could hold. People saw us as a speculative gamble. This year we are seeing people move beyond that. Crypto is not a novel thing anymore, but the hot new asset class for equities.” – Emiliano Grodzki, CEO of Bitfarms, a global public bitcoin mining operation

“The growth and expansion of cryptocurrencies had always been at odds with the interests of traditional financial systems … The Coinbase direct listing unites these two sides of finance in the success of this licensed and regulated company. Traditional investors who purchase Coinbase stock will indirectly speculate on the crypto market and similarly, crypto traders who own Coinbase stocks will have a vested interest in the success of the company.” – James Anderson, CEO of RioDeFi, an ecosystem of interoperable financial products

“The Coinbase direct listing is going to further build credibility and legitimacy for the cryptocurrency markets, which have already received huge institutional interest and flows since the start of 2021. But once the celebrations settle and the mainstream awareness of the cryptocurrency markets grow, eyes will turn to the alternative burgeoning decentralized financial (DeFi) industry and structures like DAOs (decentralized autonomous organizations) will become common knowledge.” – Samantha Yap Founder and CEO at YAP Global, a PR agency specializing in crypto, blockchain, and fintech

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Coinbase’s $100 billion valuation should be about 80% lower, New Constructs CEO says

coinbase mobile phone app
Coinbase is the largest cryptocurrency exchange in the US.

  • New Constructs CEO David Trainer said his calculations point to a valuation of $18.9 billion for Coinbase, well below the estimated $100 billion.
  • Coinbase is set for a direct listing on the Nasdaq on April 14.
  • Coinbase faces the risk of competitors driving down their fees in the young cryptocurrency market.
  • See more stories on Insider’s business page.

The potential $100 billion valuation of Coinbase Global ahead of the cryptocurrency exchange’s trading debut is “ridiculously high,” said New Constructs CEO David Trainer, with an outline from the veteran stock analyst including his view that the company’s profitability faces the risk of being slashed.

Coinbase is set for a direct listing on the Nasdaq exchange on April 14. This week, the San Francisco-based company estimated a more than 800% jump in first-quarter revenue to $1.8 billion from a year earlier but noted that it is “very difficult to accurately forecast” revenue going forward because of market volatility.

“Even though Coinbase’s revenue surged over the past 12 months, the company has little-to-no chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion,” said Trainer in a research note from New Constructs released Friday.

Coinbase is currently the largest cryptocurrency exchange in the US by revenue, and its platform offers access to Bitcoin, Ethereum, and Litecoin, among other digital currencies.

Coinbase is a standout among companies with recent IPOs because it makes a profit, said Trainer, with core earnings rising to $317 million from about $17 million in 2020 year-over-year.

But overall, Trainer said his “calculations suggest Coinbase’s valuation should be closer to $18.9 billion — an 81% decrease from the $100 billion expected valuation.”

Among Coinbase’s risks is competition as the cryptocurrency market matures, and that could lead to transaction margins at the company to fall “precipitously.”

He pointed to sharp competition in late 2019 between brokerages over stock-trading fees and said such a “race-to-the-bottom phenomenon” is likely to emerge among cryptocurrency exchanges.

“Competitors such as Gemini, Bitstamp, Kraken, Binance, and others will likely offer lower or zero trading fees as a strategy to take market share,” he said. Also, if traditional brokerages begin offering customers the ability to trade cryptocurrencies, that would “most certainly cut down on the unnaturally wide spreads in the immature cryptocurrency market.”

He said, for example, if Coinbase’s revenue share of trading volume fell to 0.01%, which is equal to traditional stock exchanges, its estimated transaction revenue in the first quarter of 2021 would have been just $35 million, instead of the estimated $1.5 billion.

“The crypto markets are very young and we expect many more companies to compete for the profits Coinbase enjoys today,” Trainer said.

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Bitcoin’s path to $100,000 is less important than its potential impact on the corporate world over the next decade, Wedbush says

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  • Dan Ives of Wedbush said bitcoin’s effect on the corporate world is more important than its price.
  • The analyst argued moves into blockchain tech and cryptocurrencies may surge over the coming years.
  • “Bitcoin mania is not a fad…but rather the start of a new age on the digital currency front.”
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Bitcoin’s path to $100,000 per coin is less important than its potential impact on the corporate world over the next decade, according to Wedbush.

In a note to clients on Thursday, Wedbush’s Dan Ives said that the story around bitcoin is much larger than its “potential path/timeline to $100,000.”

The analyst argued the important theme when it comes to cryptocurrencies is “the potential ramifications that crypto, blockchain, and Bitcoin could have across the technology and corporate world for the next decade.”

Ives said moves into blockchain technology and cryptocurrencies could surge over the coming years after companies like Tesla, IBM, Visa, Square, Mastercard, and more entered the fray recently.

There’s a “growing shift for companies to accept this digital currency as a form of payment,” according to the analyst.

Ives added that he still believes “less than 5% of public companies” will invest in bitcoin over the next 12-18 months but said that number could move “markedly higher” as more regulation and acceptance of the currency takes hold.

“Bitcoin mania is not a fad in our opinion, but rather the start of a new age on the digital currency front,” Ives wrote.

Although Ives was one of the first to the party, his comments about cryptocurrencies and their regulation are becoming more in sync with other Street commentators and even CEOs as cryptocurrencies and blockchain technologies continue to develop.

David Solomon, the CEO of Goldman Sachs, said his bank is looking into ways to support clients’ desire to own cryptocurrencies and other digital assets in a CNBC “Squawk Box” interview on Tuesday.

The CEO added that he believes there will be a “big evolution” in the way the US government regulates digital assets in the coming years.

Ives and his team also highlighted the potential of using blockchain technology for decentralized storage in their note to clients on Thursday.

The analyst said blockchain technology can help increase the overall speed and lower the price of digital storage moving forward. He noted, “there are a number of business models attacking this new market opportunity with privately-held Filecoin one of the more impressive strategies we have seen in the market.”

As far as Wedbush is concerned, Bitcoin isn’t going away anytime soon, rather it’s set to become “mainstream” and the effects on Wall Street and the corporate world will be huge.

Coinbase’s 840% revenue jump in the first quarter may be the perfect example of what Ives is talking about.

Coinbase posted $1.8 billion in revenue in its first-quarter report. That means the crypto exchange pulled in over $120 million more than Intercontinental Exchange, the company that owns the New York Stock Exchange, did in its most recent earnings report.

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Coinbase plans direct listing in 2 weeks as largest crypto exchange in the US looks to go public

coinbase office headquarters san francisco
The Coinbase headquarters in San Francisco.

Coinbase Global, the largest cryptocurrency exchange in the US, is looking to make its Nasdaq debut on April 14, having pushed it back from its initial March target date, the company confirmed today.

The San Francisco-based company will disclose details, including its reference price, the day before it goes public, Bloomberg was first to report. This timing could still change, however, sources told Bloomberg.

The planned debut is still being reviewed by the US Securities and Exchange Commission. If approved by the agency, the listing would mark a significant milestone for the digital currency ecosystem, which has struggled to earn the confidence of more conservative regulators and investors.

Coinbase revealed a higher valuation of $68 billion in March due in large part to recent private transactions ahead of its direct listing, Reuters first reported.

The increased figure signifies how much the company’s value has surged alongside the huge rally in the price of bitcoin, which hit record highs in March.

Coinbase, founded in 2012, said it planned to go public via direct listing since it does not need to raise new capital for now.

The company, which has more than 43 million users in over 100 countries, would also represent the first major direct listing on the Nasdaq.

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Coinbase plans direct listing in 2 weeks as largest crypto exchange in the US looks to go public, report says

coinbase office headquarters san francisco
The Coinbase headquarters in San Francisco.

Coinbase Global, the largest cryptocurrency exchange in the US, is looking to make its Nasdaq debut on April 14, having pushed it back from its initial March target date, Bloomberg first reported.

The San Francisco-based company will disclose details, including its reference price, the day before it goes public, sources told Bloomberg. This timing could still change, however, sources also said.

The planned debut is still being reviewed by the US Securities and Exchange Commission. If approved by the agency, the listing would mark a significant milestone for the digital currency ecosystem, which has struggled to earn the confidence of more conservative regulators and investors.

Coinbase revealed a higher valuation of $68 billion in March due in large part to recent private transactions ahead of its direct listing, Reuters first reported.

The increased figure signifies how much the company’s value has surged alongside the huge rally in the price of bitcoin, which hit record highs in March.

Coinbase, founded in 2012, said it planned to go public via direct listing since it does not need to raise new capital for now.

The company, which has more than 43 million users in over 100 countries, would also represent the first major direct listing on the Nasdaq.

Read the original article on Business Insider

Coinbase, the largest crypto exchange in the US, valued at $68 billion ahead of direct listing

coinbase mobile phone app
In this photo illustration, Bitcoin course’s graph is seen on the Coinbase cryptocurrency exchange application on February 12, 2018 in Paris, France. Founded in June of 2012, Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum, and litecoin. The company is based in San Francisco, California generated in 2017 a record turnover of one billion dollars (about 810 million euros) with exceptional trading volumes, which made it the most downloaded mobile app on iOS last December.

  • Coinbase Global on Wednesday revealed that the company now has a valuation of $68 billion ahead of its planned direct listing, Reuters first reported.
  • If the filing is approved by regulators, it will mark a significant milestone for the digital currency ecosystem.
  • Coinbase CEO Brian Armstrong and other executives will host an “Ask me anything” session on Reddit through the end of the week.
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Coinbase Global, the largest cryptocurrency exchange in the US, on Wednesday revealed that the company now has a valuation of $68 billion ahead of its planned direct listing due in large part to recent private transactions, Reuters first reported.

The increased valuation signifies how much the company’s value has surged alongside the huge rally in the price of bitcoin, which hit record highs in March. The company in a regulatory filing that Reuters first reported said its shares in the private market traded at an average price of $343.58 per piece in the first quarter of 2021, a massive rise from $28.83 per piece in the third quarter of 2020.

If the filing is approved by regulators, it will mark a significant milestone for the digital currency ecosystem that has sometimes struggled to earn the confidence of more conservative regulators and investors. D.A. Davidson analysts in early March said the listing is crucial since it symbolizes the convergence of cryptocurrency and traditional finance.

D.A. Davidson analysts led by Gil Luria also added that Coinbase’s public debut will be the “Amazon moment for crypto,” as cryptocurrency will move from “a large curiosity to becoming the future path for much of the financial system.”

The San Francisco-based company, however, did not indicate if the US has authorized it to trade cryptocurrencies, which the government classifies as securities. Founded in 2012, Coinbase has registered roughly 114.9 million shares for its direct listing.

On Wednesday, Coinbase CEO and co-founder Brian Armstrong published a post on Reddit, asking people for comments and questions about his company, the valuation, its future financial performance, and cryptocurrencies as a whole. Armstrong and other executives will host an “Ask me anything” session on the social media platform through Friday at 10 pm ET.

Coinbase has 43 million users in more than 100 countries. Its competitors include Grayscale, Kraken, and Gemini, as well as broader consumer digital wallets like Square, PayPal, and Robinhood.

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Coinbase’s expected $100 billion valuation is ‘far too high’ given the increasing competition in the cryptocurrency market, a veteran stock analyst says

coinbase mobile phone app
In this photo illustration, Bitcoin course’s graph is seen on the Coinbase cryptocurrency exchange application on February 12, 2018 in Paris, France. Founded in June of 2012, Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum, and litecoin. The company is based in San Francisco, California generated in 2017 a record turnover of one billion dollars (about 810 million euros) with exceptional trading volumes, which made it the most downloaded mobile app on iOS last December.

  • Coinbase’s rumored $100 billion valuation is “far too high,” said New Constructs CEO David Trainer.
  • The cryptocurrency exchange is set to go public via direct listing in the near future.
  • Trainer said increasing competition in the crypto exchange market will weigh on Coinbase’s lofty valuation.
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Coinbase could go public via a direct listing as early as March, but New Constructs CEO David Trainer says investors should not buy the stock if the valuation is anywhere close to current expectations.

The cryptocurrency exchange platform has a rumored valuation of roughly $100 billion, which is “far too high” given the increasing competition in the market, Trainer said in a recent note.

Although the company achieved profitability in 2020, the current expected valuation implies that Coinbase will become the largest exchange in the world by revenue, which isn’t guaranteed given the existence of competitors like Gemini, Kraken, and Binance, he added.

In 2020, transaction revenue represented over 96% of Coinbase’s net revenue, according to Coinbase filings. Trainer points out that the exchange’s transaction revenue as a percent of trading volume is 57 times higher than the Intercontinental Exchange, which runs the New York Stock Exchange.

Competitors will likely emulate Coinbase’s high margins, and the exchange’s “competitive position will inevitably deteriorate,” Trainer said.

“…if stock trading fees are any indicator for crypto trading fees, we should expect them to quickly go lower if not to zero,” said the research analyst. “Competitors such as Gemini, Bitstamp, Kraken, Binance, and others will likely offer lower or zero trading fees as a strategy to take market share, which would start the same “race to the bottom” that we saw with stock trading fees in late 2019.”

“The likelihood of Coinbase maintaining such high fees is very low in a mature market,” he added.

With an expected valuation of $100 billion, Coinbase would earn a “neutral” rating from New Constructs.

Last week, D.A. Davidson initiated coverage of Coinbase with a “buy” rating and price target of $195. However, the analysts said it’s too early to tell if Coinbase will become the “Amazon of crypto” or the failing Netscape.

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Coinbase’s CEO is set to get a $3 billion windfall as his company goes public amid a cryptocurrency boom

brian armstrong coinbase
Coinbase Founder and CEO Brian Armstrong attends Consensus 2019 at the Hilton Midtown on May 15, 2019 in New York City.

  • Coinbase founder Brian Armstrong is set for a hefty payday as his company speeds toward a direct stock listing. 
  • According to Bloomberg calculations, his stock options could total a $3 billion windfall. 
  • Considered a bellwether for the cryptocurrency industry, Coinbase’s public listing could give legitimacy to the movement. 
  • Visit the Business section of Insider for more stories.

Coinbase’s surge in popularity amid a boom in cryptocurrencies has helped mint founder and CEO Brian Armstrong as one of the newest Silicon Valley ultra-rich.

Amstrong is set to reap a potential $3 billion windfall from the digital currency exchange’s direct listing as a trend of mega grants to tech founders continues full steam ahead, Bloomberg calculated from company filings and news reports. His stake in the company is worth $15 billion, the news site estimates.

In 2020, Armstrong took home $56 million of stock option awards on top of a $1 million salary and another $1.8 million in reimbursement for legal and security fees, according to registration documents

Like peers including Elon Musk, the most well-payed CEO in the world in recent years, Armstrong’s pay day isn’t a shoe-in. He’ll need to shepherd the company through a choppy cryptocurrency market, and hit certain milestones along the way. What’s more, his 9.3 million option grant doesn’t even begin vesting until Coinbase’s stock price hits $200 – up from a “fair value” award price of $23.49.

“We believe the performance conditions associated with the 2020 CEO Performance Award are extremely rigorous and appropriately align Mr. Armstrong’s incentives with the interests of our stockholders,” Coinbase said in its filing. His options fully vest at a roughly 1,600% price increase.

Coinbase is set to hit public exchanges within weeks, when outside investors for the first time will value shares of the company. Luckily for Armstrong, the required price increases could be near: Axios reported in February that Coinbase sold several tranches of stock totaling 1.8 million shares, going for as high as $303 each – a nearly 1200% increase from the option strike price.

As traders await first trades, bitcoin has continued to spike higher. The world’s largest cryptocurrency surged as high as $57,000 last month before paring some of gains in recent weeks.  A survey by Goldman Sachs found the bank’s clients to be largely optimistic about the currency’s future price, with 22% expecting it to double in the next year.

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Coinbase’s direct listing is ‘an Amazon moment for crypto,’ and will bring cryptocurrency further into mainstream finance, D.A. Davidson says

Coinbase Founder and CEO Brian Armstrong
Coinbase Founder and CEO Brian Armstrong

  • Coinbase’s upcoming direct listing will be an “Amazon moment” for cryptocurrencies, according to D.A. Davidson. 
  • The firm initiated coverage of the crypto exchange with a “buy” rating and $195 price target. 
  • D.A. Davidson said the public debut will be a milestone for the convergence of cryptocurrency and traditional finance.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Coinbase’s upcoming direct listing will be a milestone event, marking the covergence of cryptocurrency and traditional finance, according to a team of D.A. Davidson analysts. 

In a recent note D.A. Davidson initiated coverage of the cryptocurrency exchange with a “buy” rating and a price target of $195. Analysts led by Gil Luria said Coinbase’s public debut will be the “Amazon moment for crypto,” as cryptocurrency will move from “a large curiosity to becoming the future path for much of the financial system.” 

Coinbase will be the first major cryptocurrency exchange to go public. According to the analysts, the exchange’s superior user experience has positioned it as the “leader” in facilitating the onramp/off-ramp from government currency (like dollars) in crypto (like bitcoin.)

“With a big target on its back as a crypto wallet, (to date) Coinbase has been able to manage both government regulators as well as highly motivated hackers, while providing consumers with the experience they expect from a large financial institution,” the analysts added.

As both an exchange and broker, Coinbase’s competition includes Grayscale, Kraken, and Gemini, as well as broader consumer digital wallets like Square, PayPal, and Robinhood, said D.A.Davidson.

The firm’s $195 price target is based on 2021 revenue estimates, but the firm has not been able to connect with Coinbase during its quiet period. Revenue in 2020 was $1.28 billion, a jump from $553.7 million in 2019, according to a consolidated operations statement included in Coinbase’s filings.

For the year ended December 31, 2020, transaction revenue represented over 96% of net revenue. Bitcoin has soared 68% in 2021 and it’s unclear how that affects revenue estimates.

D.A. Davidson noted Coinbase is a more speculative investment than other companies it covers. They also noted the unusually high risks associated with the volatility of crypto prices, and said it’s too early to tell if Coinbase will actually become the Amazon of crypto or the Netscape.

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Cryptocurrency exchange Coinbase files to go public in a direct listing on Nasdaq

coinbase mobile phone app
In this photo illustration, Bitcoin course’s graph is seen on the Coinbase cryptocurrency exchange application on February 12, 2018 in Paris, France. Founded in June of 2012, Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum, and litecoin. The company is based in San Francisco, California generated in 2017 a record turnover of one billion dollars (about 810 million euros) with exceptional trading volumes, which made it the most downloaded mobile app on iOS last December.

  • Coinbase is seeking a direct listing on Nasdaq, according to paperwork the company filed with the SEC on Thursday. 
  • The largest cryptocurrency exchange in the US said revenue surpassed $1 billion in 2020. 
  • Coinbase said it has 43 million verified users and 2.8 million users that make transactions monthly. 
  • Visit the Business section of Insider for more stories.

Coinbase Global has filed to go public, seeking a direct listing on Nasdaq, according to paperwork filed with the US Securities and Exchange Commission on Thursday. 

According to the form S-1 filed with the regulator, revenue has more than doubled in the last year, highlighting the growing appetite for digital currencies. Coinbase said it has 43 million verified users and that 2.8 million conduct transactions monthly. With bitcoin and ethereum, the platform supports more than 90 crypto assets for trading and custody.

“While we are still in the early stages of adoption, the market value of exchange-traded crypto assets was already approximately $782 billion as of December 31, 2020,” Coinbase said in its filing.

Revenue in 2020 was $1.28 billion, a jump from $553.7 million in 2019, according to a consolidated operations statement included in the filing. Coinbase said it will not receive any proceeds from the sale of its Class A common stock by registered stockholders.

The filing for an initial public offering by Coinbase arrives at a time when the price of Bitcoin has skyrocketed in recent weeks. Meanwhile, there were an estimated 106 million crypto users worldwide in January, according to a report from exchange Crypto.com.

“Our objective is to drive the growth of the overall cryptoeconomy by serving the needs of all consumers who manage their financial lives on a mobile device, and every institution — large or small — that embraces the emerging internet of value,” said Coinbase.

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