Coinbase, one of America’s most well-known cryptocurrency companies, has confidentially filed to go public. It’s been about a month since the well-funded Coinbase announced its upcoming IPO, which could come sometime in early 2021. That IPO market momentum that we saw in 2020 has continued into 2021.
A market debut from Coinbase has been anticipated for some time. There were even rumors that the company was expecting to debut sometime in 2020, but obviously, those plans fell through. Coinbase broke the news about its market debut in a blog post around the end of December. The digital currency exchange was founded back in 2012, and like the majority of the unicorn startups that catch the public’s eye, it’s based in San Francisco, California. It brokers exchanges of Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, and Tezos as well as with other cryptocurrencies. Coinbase serves about 32 countries with fiat currencies and 190 countries with bitcoin transactions and storage.
The company was founded in 2012 by Brian Armstrong, a former Airbnb engineer, and Fred Ehrsam, a former Goldman Sachs trader. Coinbase made some interesting steps toward growth as a young company. By 2014, it had grown to one million users and had partnered with big brands, like Overstock, Dell, Expedia, Dish Network, and Time Inc., to accept bitcoin payments. Bitcoin payment processing capabilities were also added to traditional payment companies like Stripe, Braintree, and PayPal. Fast-forward a few years to 2017 and 2018 when the cryptocurrency market hit a valuation of around $830 billion. From there, the market valuation, and the price of Bitcoin, began to drop. It wasn’t until November 2020 that things started to pick back up for the crypto world, with Bitcoin surpassing its previous peak price, trading above $20,000.
For a few months now, cryptocurrencies and the cryptocurrency market seem to be back on the radar for investors and market watchers. The price of Bitcoin has gone from about $9,177 to $36,380 in six months. This cryptocurrency rally seems a little different from what happened a few years ago, especially now with uncertainties surrounding the U.S. economy and the potential for a long-term economic crisis. Institutional investors want alternative assets — like Bitcoin and other cryptocurrencies.
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This type of market uptick creates a good IPO story for Coinbase and enhances its ability to market itself to investors ahead of its public debut. The details of how the company plans to make its public debut are still unclear. Will it take the traditional route with an initial public offering or through a direct listing? It’s also unknown when exactly the company will go public. Most likely, it will want to debut soon to benefit from the momentum of the cryptocurrency market. Flori Marquez, the founder of the crypto lender BlockFi (Coinbase is an investor of BlockFi), had this to say about a Coinbase IPO:
To know that you have a crypto company in front of the SEC, having active conversations in terms of thinking, how do we make it easier for U.S. consumers to invest in this asset class, is just huge news for the space as a whole… I think it bodes extremely well for future development within Bitcoin and what companies can do in the space going forward.
In October 2018, Coinbase raised a significant amount of money in its Series E funding round, earning about $300 million. At that time, the company’s valuation was estimated at around $8 billion, but that number is likely a lot higher now. That was a few years ago, and with the company’s most recent financial details unavailable to the public, it’s unclear how much Coinbase’s revenues have grown. An IPO from Coinbase could be huge for the company and the market. Cryptocurrency is still a fairly new market and most retail investors have misconceptions about it or find it confusing. Having a company like Coinbase at the forefront and public could lessen the confusion for investors.
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Until next time, Monica Savaglia Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.
