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PRESS DIGEST- Financial Times – April 13


Coinbase is heading towards $ 100 billion in valuation on Crypto Frenzy

(Bloomberg) – It looks like Wall Street is about to get 100 billion new reasons to believe in Bitcoin Coinbase Global Inc., the fast-growing exchange at the center of the speculative frenzy in cryptocurrencies, is expected to go public this week. at a staggering valuation of about $ 100 billion. That’s more than the venerable New York Stock Exchange and Nasdaq Stock Market put together – for a company that didn’t even exist a decade ago. – If all goes to plan, Wednesday’s planned direct listing on Nasdaq will bolster Coinbase’s position as the Big Board. of the US crypto scene and a powerful symbol of the risks and rewards of the new era of digital money. Its founders, Brian Armstrong and Fred Ehrsam, own $ 15 billion and $ 2 billion, respectively, according to Bloomberg estimates. The bottom line at the San Francisco stock market seems to justify the skyrocketing valuation, at least recently. Coinbase said last week that it expects a first-quarter profit of $ 730 million to $ 800 million, more than double what it made in all of 2020. And revenues in the first three months of 2021 likely surpassed last year’s $ 1.3 billion total. . That’s comparable to the $ 5.6 billion in revenues that Nasdaq generated last year. Coinbase has 56 million verified users and is adding approximately 13,000 new retail customers per day, according to cryptocurrency analytics firm Messari. “Coinbase is one of the most prominent cryptocurrency exchanges in the world,” Mira Christanto, an analyst who covers the company for Messari, said in a research report. “The market has shown investors are hungry for crypto exposure through stock markets.” astonishing surge for a company started in a San Francisco apartment in 2012 by Armstrong and Ehrsam, who met online at a Bitcoin forum on Reddit. The apparent demand for Coinbase stock reflects the hunger for all things crypto Bitcoin has rallied nearly eightfold in the past year, hitting a record $ 61,742 in mid-March. Coinbase’s opportunity now is to conquer the increasing number of institutional and corporate clients, such as MicroStrategy Inc. and Tesla Inc., who purchase Bitcoin for the long term. ”That will be the holy grail for them if they can keep that company, because those people are seen more as keepers than as merchants. ”said Julie Chariell, senior analyst at Bloomberg Intelligence for fintech and payments companies. By offering additional products such as custody services, Coinbase could look more like a bank than a stock exchange in a few years, according to Chariell. “It’s a broader game, becoming a one-stop shop for anything you want to do with your crypto assets,” she said. Coinbase spokesperson Elliott Suthers declined to make company officials available for comment, citing the “quiet period.” Coinbase It’s been a long and sometimes grueling road to its planned debut, and risks to the business model still remain. Coinbase disclosed in its stock sale filings that it had received a subpoena from the Securities and Exchange Commission. According to a person familiar with the case, the investigation related to XRP, the digital token created by Ripple that is under an SEC lawsuit alleging that it was sold as an unrecorded security. The same month, the SEC announced that it was Ripple and two of its founders for violating US securities laws. Coinbase was forced to drop XRP, which was the third most valuable cryptocurrency in the world at the time, from the list.It’s hard to say how the loss of XRP impacted Coinbase’s earnings as Bitcoin skyrocketed at the same time, according to Bloomberg Intelligence. Chariell. A greater risk would be the need to scrap many of the alt coins that Coinbase is now offering if the SEC case determines that XRP is a security. “It’s a risk for sure, but I just don’t think it’s a big risk here,” she said. Despite XRP scrutiny, Coinbase’s expansion plans seem to be working. In 2020, coins on the exchange other than Bitcoin and Ether accounted for the largest revenue share, at 44%, according to the SEC filing. “It made economic sense for Coinbase to list in-demand tokens due to increased competition from other exchanges,” Messari’s Christanto said Bitcoin Link. Another risk: Coinbase’s fortunes mostly match Bitcoin’s volatile history. The exchange only made a profit last year as institutional demand for crypto assets pushed Bitcoin and other currencies such as Ether to new highs. The recent lean years, known as the crypto winter, stretched from 2018 to 2019, with Bitcoin hitting a low of around $ 3,100 in December 2018. Until then, Coinbase was known for listing only the major players in the crypto world, including Bitcoin, Litecoin, and the prospects of Ether. Coinbase doesn’t amount to one token like XRP. Most of its revenue comes from trade fees, with retail customers being charged an average of 1.4% and institutional customers about 0.05%, Christanto said. To get through the lean years, Coinbase has held seven rounds of fundraising for a total of more than $ 500 million since September 2012, according to research by Messari. That’s on top of revenue from the sale of Bitcoin and Ether, which more than tripled to $ 134 million last year, according to Messari, all of which has given Coinbase a strong financial position to disclose. Based on the company’s figures, Chariell calculated that 5.5 million monthly users equates to $ 3 billion in revenue in 2020. The top 12 fintech companies to go public in the past six months have 36 times price-to-sell ratios she said. If you multiply that turnover by 2020, you get a very large number. “You are easily over $ 100 billion in market cap,” she said. For more articles like this, visit bloomberg.com. news source. © 2021 Bloomberg LP

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