The company has already listed its shares on the NASDAQ Private Market and is expected to go public in a direct-listing sometime this year.
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4 min read
This story originally appeared on MarketBeat
With its exposure to the consumer, fintech, cryptocurrency, defi, and the IPO market, Coinbase (tokenized stock:CBSE) might be the hottest ticket on the market today. The company has already listed its shares on the NASDAQ Private Market and is expected to go public in a direct-listing sometime this year. We think sometime in the first half of the year and sooner rather than later. To that end, the company just released a prospectus that has Wall Street re-evaluating the valuation. Trades on Private Market indicated a value as high as $77 billion within the past week. That about $300 per share which’s up roughly 33% from the Private Market-IPO, and now the value is being pushed upward of $100 billion. Tokens of the Coinbase/USD tokenized-shares are trading for $400.
At these levels, Coinbase is being valued at a greater price-point than Intercontinental Exchange (NYSE:ICE), the parent of the NYSE, a value that is pricing in some phenomenal growth. According to the prospectus, Coinbase pulled in just shy of $1.30 billion in revenue for 2020 which is a bit short of the $6.88 expected for ICE this fiscal year. The roughly $5.5 billion in revenue difference implies Coinbase will grow in excess of 430% in the foreseeable future and that is really not a wild assumption.
Simply looking at the YOY data provided in the prospectus, not only is the company’s revenue growing at a triple-digit 140% rate but there are other internal data points that support the growth outlook as well. The total number of users grew by 10 million or 33% over the past year and was compounded by an increase in activity. Those 10 million new users net a total of 1.8 million new active monthly users which is up 180% over last year. In terms of dollar volume, the uptick in user growth, activity, and the prices of cryptocurrencies resulted in a total trade volume of $193 billion or up 141%.
Coinbase is a link to the Defi market
Another notable statistic to be aware of is the amount of money Coinbase is holding in its custodial accounts. The total value of crypto assets grew 200% from $1.2 billion to $3.76 billion over the past year and is supported by growth in defi. Defi or decentralized finance is a host of financial applications built on top of Ethereum (usually) smart-contracts. Not only is Coinbase a channel for money flowing into the defi market it offers its users a variety of ways to benefit as well.
Among the easiest way to profit from defi is holding Dai tokens. Dai tokens are part of the Maker/Dai defi network and earn the Dai Daily Savings rate which is calculated and paid out daily. Maker, the governance token for the system, is the largest defi network by market and worth about 16% of the market.
And defi is no joking matter. The total value locked into defi applications is very near to $40 billion and up roughly 100% on a YTD basis. And that doesn’t count the $6 billion or so locked into the Ethereum 2.0 Beacon Contract either. The takeaway is that defi is the next-generation of cryptocurrencies and is driving the market. And Coinbase is right in the thick of it.
Coinbase is worth a nibble
With so many factors at play, it is hard to know exactly how to value Coinbase. Do you value it based on current business, future business, the size of the cryptomarket, or its own holdings of cryptocurrencies which is quite vast. In the end, it will be all of these things that determine the value so we are expecting this market to be volatile. Even so, we also think this IPO is one that investors may want to take a nibble because price action might take off right from the get-go.