Coinbase sinks to the lowest level since its IPO as newly public companies struggle

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Coinbase shares tumbled to their lowest since the company’s hotly-anticipated Nasdaq direct listing on April 14.

The stock price of the largest cryptocurrency exchange in the US slipped 8.16% to $251.85 at around 2 p.m. ET Thursday, continuing its slide for the fourth straight day. It was trading 5.50% lower to $257.98 as of 3:40 p.m. ET.

“Coinbase, from a stock perspective, has entered bear market correction territory,” David Wagner, portfolio manager and analyst at Aptus Capital Advisors, told Insider.

While Coinbase’s debut saw volatile trading through the day, the company had a valuation on a fully diluted basis of about $86 billion by the end of the session. The stock had a $250 per share reference price and opened at $381 before hitting an intraday high of $429.54, then reversing course to trade as low as $310.

Wagner added that from a fundamental standpoint, institutional investors may be worried to dip their toes into Coinbase as the stock appears to be priced at a very high multiple. He also said that the lack of a lock up period may also be a reason as this gives insiders and early investors little incentive to hold their shares.

Coinbase, the first major cryptocurrency exchange to go public, was viewed by crypto bulls as a milestone for the digital ecosystem as it looks to continue to make headway into mainstream financial markets.

Coinbase does not offer trading in cryptocurrencies that have been seeing explosive rallies in the past few days, such as dogecoin, the meme token that has seen a 13,000% gain year-to-date, or Binance Coin, the third-largest cryptocurrency with a $99 billion valuation.

“Coinbase has been in a steady decline since its debut as many cryptocurrency traders have begun betting big on altcoins and tokens on other exchanges, while some have decided to directly hold their cryptos in a wallet,” Edward Moya, senior market analyst at Oanda, told Insider.

Cryptocurrency exchange Gemini allowed customers to trade dogecoin staring this Tuesday, joining a growing list of platforms such as Kraken and Robinhood.

Competition is also a concern. While rival Binance has said it has no plans of going public, Kraken said it could go public next year after seeing an explosion in bitcoin trading volume.

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Expected top NFL draft pick Trevor Lawrence reportedly signed an endorsement deal with crypto-investment app Blockfolio – and took his first payment in crypto tokens

Trevor Lawrence, the expected top pick in the upcoming 2021 NFL Draft, has signed a multiyear deal with investment app Blockfolio and was paid exclusively in cryptocurrency, DealBook first reported Monday.

The first payment to football star was immediately transferred to his Blockfolio account. Future payments, however, are subject to whatever combination of dollars and cryptocurrency the former Clemson quarterback desires, according to DealBook.

Other terms of the agreement were not disclosed but a company spokesman revealed that the crypto signing bonus was already worth more on Sunday compared to when it was deposited on Friday.

The football player also made the announcement on Twitter, saying he is “pumped” to join the startup.

“We’re really trying to get our name out a lot,” Sam Bankman-Fried, CEO of FTX, a crypto exchange that acquired Blockfolio, told Dealbook. “Trevor was excited about crypto. That’s what drew us to him.”

Bankman-Fried founded Blockfolio in 2019. Prior to that, the 29-year-old, a former trader at quant-trading firm Jane Street, started a crypto-trading firm called Alameda Research, which launched him to billionaire status.

Given that the cryptocurrency firm, which considers Coinbase as its rival, is relatively new, the company has been trying to partner with bigger brands to garner name recognition.

Under a recent $135-million deal, Blockfolio won naming rights to the NBA’s Miami Heat arena for 19 years, overtaking American Airlines as the leading sponsor for the Florida sports team.

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Coinbase’s first employee was hired after he emailed his undergraduate thesis on bitcoin to the founders – and was paid in cryptocurrency for 3 years

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Olaf Carlson-Wee.

Olaf Carlson-Wee, the founder of a cryptocurrency hedge fund, was the first employee at the biggest US bitcoin exchange, Coinbase.

After graduating from New York’s Vassar College with an undergraduate degree in Sociology, Carlson-Wee decided to send an “annoyingly long” cold email to Coinbase’s founders.

He detailed his hiring experience in a 2016 interview with startup accelerator, Y Combinator.

As one of Coinbase’s earliest users, Carlson-Wee grew determined to work with the company. He sent his roughly 90-page undergraduate thesis on “Bitcoin and the larger implications of open source finance” to the founders, hoping to land an interview.

“I literally cold emailed jobs@coinbase and said, ‘I love bitcoin. Here’s my thesis. I’ll do any job’,” he said.

About five minutes after his email, Carlson-Wee heard back from one of the cofounders, Fred Ehrsam, who asked if they could hop on a Skype call.

They chatted for about 20 minutes, and the crypto enthusiast was asked to come prepared with two presentations at an in-person interview in San Francisco.

“The first should explain something complicated you know very well. The second should outline your vision for Coinbase,” Carlson-Wee said he was told.

He said his first presentation was on the pharmacological induction of lucid dreams and the second was on his high-level strategy for Coinbase with a focus on security.

“My strategy was to clean up PR problems, but focus 100% on security. Bad customer experiences will eventually be forgotten, but a security incident will not be forgotten.”

He was then asked to tackle a “really brutal mathematics problem” while Ehrsam went to talk over the hiring decision with the second cofounder, Brian Armstrong.

Carlson-Wee said he figured out the problem way faster than he would have expected. He was then grilled by Armstrong for another hour with questions like “What do you wanna do with your life?,” “What drives you as a person?,” and “What’s a belief you have that is extremely unpopular?”

Four days later, he was asked to work a two-week paid trial in customer support and eventually landed a formal job offer. “I did customer support by myself until we had 250,000 users. It was a marathon. It was like 12-hour days of fast replying,” he said.

During his three-year stint at Coinbase, Carlson-Wee’s $50,000 starting salary was paid entirely in bitcoin, according to the Wall Street Journal. It is unclear how much bitcoin he currently owns.

He now runs his own crypto hedge fund called Polychain Capital, managing assets worth more than $300 million, that has secured investments from Coinbase’s Ehrsam and venture capitalists like Sequoia Capital and Founders Fund.

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Coinbase is officially worth more than GM, FedEx, and Twitter after its market debut

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Coinbase CEO Brian Armstrong.

  • Coinbase’s market value peaked at $112 billion during its first day of trading.
  • The crypto exchange was valued higher than Target or Airbnb at that point.
  • Coinbase is still worth more than General Motors, Twitter, or Chipotle.
  • See more stories on Insider’s business page.

Coinbase‘s market capitalization soared as high as $112 billion during its trading debut on Wednesday, valuing the business more highly than some of America’s biggest and best-known companies.

At its intraday peak, the 9-year-old cryptocurrency exchange was briefly worth more than Lockheed Martin ($108 billion), Airbnb ($106 billion), or Target ($103 billion). Even after paring its gains and ending the day with a $86 billion market cap, it beat out General Motors ($84 billion), FedEx ($76 billion), and Twitter ($56 billion).

Moreover, Coinbase is currently worth more than twice as much as Chipotle ($43 billion), eBay ($43 billion), Hilton ($35 billion), or Electronic Arts ($41 billion).

Coinbase’s market value is notable because it generated only $322 million of net income in 2020, a fraction of Lockheed’s $6.9 billion or GM’s $6.4 billion in profits last year. However, its backers are betting it will grow into its valuation by cashing in on the crypto boom and expanding its operations.

The company is certainly growing quickly. It earned up to $800 million in net income in the first quarter alone, or more than double its profits for the whole of last year. The group also reported 6.1 million monthly transacting users and $335 billion of trading volume in the period.

Coinbase went public on the Nasdaq index via a direct listing, making it the biggest company yet to take that route to market. Direct listings spare companies from issuing new shares and diluting their investors. They also allow existing shareholders to cash in their stock and avoid the usual six-month lockup period.

Read more: Bitcoin is a headache to store, and that’s created an investment opportunity that could theoretically pay determined traders big risk-free returns by December

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