Dear Reader,
Coinbase, the American cryptocurrency exchange platform, is about to go public via direct listing today.
According to various news sources, Coinbase could go public at close to 100 billion USD valuation.
What is the real intrinsic worth of Coinbase?
I estimate Coinbase could actually grow into its 100 billion USD valuation in 5-7 years. Currently, Coinbase is worth, according to my estimates, around 70 billion USD.
According to its IPO SEC Filing Coinbase made 1.277 bln. USD in revenue and 127.471 mln. USD in profit in the calendar year 2022 compared to revenue of 482.9 mln. USD and incurred a loss of 30.387 mln. USD in the calendar 2019.
Year Ended December 31, | |||||||||||
2020 | 2019 | ||||||||||
Consolidated Statement of Operations Data | (in thousands, except per share data) | ||||||||||
Revenue: | |||||||||||
Net revenue | $ | 1,141,167 | $ | 482,949 | |||||||
Other revenue | 136,314 | 50,786 | |||||||||
Total revenue | 1,277,481 | 533,735 | |||||||||
Operating expenses: | |||||||||||
Transaction expense | 135,514 | 82,055 | |||||||||
Technology and development | 271,732 | 185,044 | |||||||||
Sales and marketing | 56,782 | 24,150 | |||||||||
General and administrative | 279,880 | 231,929 | |||||||||
Restructuring | — | 10,140 | |||||||||
Other operating expense | 124,622 | 46,200 | |||||||||
Total operating expenses | 868,530 | 579,518 | |||||||||
Operating income (loss) | 408,951 | (45,783) | |||||||||
Other income, net | (248) | (367) | |||||||||
Income (loss) before provision for (benefit from) income taxes | 409,199 | (45,416) | |||||||||
Provision for (benefit from) income taxes | 86,882 | (15,029) | |||||||||
Net income (loss) | $ | 322,317 | $ | (30,387) | |||||||
Net income (loss) attributable to common stockholders: | |||||||||||
Basic | $ | 108,256 | $ | (30,387) | |||||||
Diluted | $ | 127,471 | $ | (30,387) | |||||||
Net income (loss) per share attributable to common stockholders: | |||||||||||
Basic | $ | 1.58 | $ | (0.50) | |||||||
Diluted | $ | 1.40 | $ | (0.50) | |||||||
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common stockholders: | |||||||||||
Basic | 68,671 | 61,317 | |||||||||
Diluted | 91,209 | 61,317 | |||||||||
Pro forma net income per share attributable to common stockholders (unaudited): | |||||||||||
Basic | $ | 1.76 | |||||||||
Diluted | $ | 1.57 | |||||||||
Pro forma weighted-average shares of common stock used to compute pro forma net income per share attributable to common stockholders (unaudited): | |||||||||||
Basic | 182,945 | ||||||||||
Diluted | 205,575 |
As of December 31, 2020 | |||||||||||
Actual | Pro Forma(1) | ||||||||||
Consolidated Balance Sheet Data | (in thousands) | ||||||||||
Cash and cash equivalents | $ | 1,061,850 | $ | 1,061,850 | |||||||
Customer custodial funds | 3,763,392 | 3,763,392 | |||||||||
Total assets | 5,855,414 | 5,855,414 | |||||||||
Custodial funds due to customers | 3,849,468 | 3,849,468 | |||||||||
Total liabilities | 4,329,363 | 4,329,363 | |||||||||
Convertible preferred stock | 562,467 | — | |||||||||
Total stockholders’ equity | 963,584 | 1,526,051 |
Coinbase's growth insures the company will be a large capitalization company in the near future. Yes, new entrants to the market can broker cryptocurrencies at zero commission, but Coinbase has first mover advantage and will monetize its cryptocurrency brokerage platform in other ways.
What is more, cryptocurrency is a disruptive force. Its underlying hashing blockchain algorithm can profoundly change many industries like finance, insurance, real estate. Bitcoin's distributed ledger can provide a safe storage platform and may even disrupt cloud computing.
This means that Coinbase could use its experience and knowledge in the cryptocurrency market to enter new industries and thus achieve higher future revenues and profits which will translate into a higher valuation.
Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".
Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
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