Coinbase IPO would be a world first

Coinbase has taken its first step to becoming the world’s first publicly traded cryptocurrency exchange.

Dot the I. SEC regulators still need to review Coinbase’s draft registration statement, but it’s thought the IPO could come as soon as early 2021.

IPO rumors first broke in July after Reuters cited sources who said Coinbase was looking to enlist law firms to help with a potential direct listing.

But Coinbase’s filing comes at a high point for institutional Bitcoin demand.

Impeccable timing. With BTC treasuries growing alongside its price, some Wall Street insiders have bombastically predicted the cryptocurrency could one day fetch as much as $400,000 per coin.

Surging popularity has also seen PayPal and Square make crypto a key part of their products — which means investing in either company comes with indirect exposure to crypto markets, as would Coinbase stock.

How much is Coinbase worth? The San Fran exchange was worth $8 billion when it raised $300 million in a Series E round in October 2018. Although, how the market values Coinbase if and when its IPO happens, chuck a dart. Nobody knows. 

Of course, that’s not stopped speculation: some in-the-know reckon it could hit $15 billion while others say $28 billion — ranking Coinbase somewhere between Dominos Pizza and Best Buy.

Other crypto stocks? Coinbase might be the first crypto exchange to go public, but it won’t be the only crypto native stock on the market.

Small-cap crypto mining outfits Riot Blockchain and Hut 8 are up 1,200% and 200% this year, the former eclipsing BTC’s returns in a big way.

Ecommerce play turned blockchain investors has rallied hard, too, up 730% year-to-date, although crypto makes up a tiny portion of its overall revenue (it’s mostly retail).

Chinese mining chipset manufacturer Bitmain is also hanging around, and even just filed another IPO attempt for the Hong Kong market.

What about cash flow? Details of Coinbase’s financials are still scarce. Chief Brian Armstrong previously claimed the exchange is profitable for three years running, and Reuters calculated revenue hit around $520 million in 2018, down from $1 billion in 2017.

However, Coinbase’s UK arm suffered a 22.5% drop ($8 million) in annual profits last year, with revenue falling around $70 million — a 38% decline.

Coinbase is likely to have raked in a little more in 2020 due to Bitcoin’s recent rally.

Still, MultiCoin Capital co-founder and Coinbase investor Kyle Samani told Bloomberg that the IPO would be a “huge event” for the industry, describing it as a watershed moment for crypto’s legitimization.

Let’s see how it sticks the landing.

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