Coinbase’s valuation has grown exponentially in recent years—more than tenfold since late 2018, when the firm was valued at $8 billion in a private financing round.
Coinbase Global, the largest cryptocurrency exchange in the US, made its debut on the Nasdaq on April 14. When the dust settled on its initial day, its price stood at $328.28. With a market cap of $86 billion, Coinbase invited comparisons with Facebook’s and Airbnb’s initial public offerings.
The event was notable for several reasons: Coinbase, with 56 million registered users, became the first crypto company to list on a US stock exchange; it was also Nasdaq’s first major direct listing. The firm sidestepped a typical IPO and the increasingly popular special purpose acquisition company (SPAC) as routes to the public.
As CEO Brian Armstrong told CNBC, “I wanted there to be just a true market on day one that set the price, not something that was set behind closed doors.” The direct listing, which provides greater accessibility to retail investors, is also more “true to the [democratic] ethos of crypto,” he added.
Coinbase’s valuation has grown exponentially in recent years—more than tenfold since late 2018, when the firm was valued at $8 billion in a private financing round. Still, questions remain for investors.
For instance, the firm’s exchange revenue derives primarily from transaction fees on trades of Bitcoin (BTC) and Ethereum (ETH), the two leading cryptocurrencies. But what happens to Coinbase’s revenue if the prices of BTC and ETH, which have risen 800% and 1,300% respectively over the past year, plunge? Its fat revenue margins might narrow too, as more competitors enter the crypto exchange business.
The entire blockchain sector might draw more scrutiny from governments, central banks and regulators, as well. “We should expect considerably higher levels of regulation in the crypto market,” said Nigel Green, CEO and founder of deVere Group, in a prepared statement.
Coinbase’s listing appears to be another sign that cryptocurrencies—and the blockchain technology they’re built on—have gone mainstream. “Coinbase will be the torchbearer for the whole block-chain community in the public market,” Kavita Gupta, founding managing partner at Delta Growth Fund, told Cointelegraph.