• Andrew Hendren

Cryptocurrency and An Unusual IPO

Updated: Apr 9

United States’ largest cryptocurrency exchange and wallet Coinbase is scheduled to go public via a direct listing on April 14th. By design, this method of issuing stock takes investment banks out of the picture. Coinbase Global won’t have to pay a bank to go public, but they also won’t generate any funds through the listing.

Based on shares being sold in private markets, it is estimated that the company is worth $67.6 billion. In 2020, they made a profit of $322 million, and they currently have a billion dollars on hand. A lot of their success stems from a business model akin to Robinhood. A simple UI and quick transactions make it easy for beginners and veterans alike to utilize the app.

Coinbase’s success is heavily dependent on the success of Bitcoin, as fees from transactions are responsible for 96% of revenue. 2019 was a bad year for Bitcoin and the company ended up losing approximately thirty million dollars.

Through a Reddit Q&A, company executives revealed that they considered selling equity in their company on Coinbase itself. However, due to issues related to technology and regulations they had to postpone this idea.