In Focus: The Coinbase IPO
It's been a long tough road for Coinbase. Started in 2012, three years after Bitcoin, skeptics wondered then why fake money needed an exchange? The skeptics that doubted Bitcoin and Coinbase have been walloped by Bitcoin's rise from pennies to $58,000; and they're about to eat even more crow when Coinbase goes public.
After years of rumors Coinbase is finally set to go public, and I am extremely bullish on the company.
Coinbase has filed to complete a direct listing, similar to what Spotify (SPOT), Slack (WORK), and Palantir (PLTR) did. In a direct listing no new shares are created, instead entities that are already invested in Coinbase get to sell their shares to the public.
COIN will be the ticker symbol for Coinbase, and $100 billion could be the company's public valuation, which is a higher valuation than the New York Stock Exchange's parent company (ICE).
There are very few companies growing like Coinbase. In 2013 Coinbase had only 13,000 customers, and now Coinbase boasts 43 million verified users and 2.8 million monthly transactions.
Coinbase reported 2020 revenue of $1.27 billion, an increase of 139% from 2019. Currently the large majority of the Coinbase's revenue comes from cryptocurrency transactions. As of 2020 96% of revenue was from crypto transactions.
Late to the Party
If you've read this weekly long enough, you'll know that I was late to the cryptocurrency party. I was too busy listening to experts tell me it's worthless and fools gold, silly me.
Below are two of the headlines that I should've paid more attention to at the time. Hindsight is 20/20, but these are screaming buy signals. If anything else not named Bitcoin was doing $1 million a month in business, we'd all run to invest in it. But at the time, in 2013, people still thought it was all a joke.
Not Just Nerd Stuff
All those years ago when Bitcoin debuted, it was considered nerd stuff, geeks playing with computers and making money that no one will ever want. We've come to see how wrong first impressions can be.
Coinbase is doing a lot more behind the scenes than just allowing "geeks playing with computers" to buy, sell, and store cryptocurrencies. It's believed that Coinbase helped facilitate the $1.5 billion Bitcoin purchase made by Tesla earlier in the year. And Tesla isn't the only mega corporation Coinbase has done business with. The company's S1 revealed it has 7,000 institutional customers.
Customers big and small are finding ways to use Coinbase, and it's reflected in the company's trading volume growth. Trading volume on the Coinbase platform has increased from $17 billion in 2018 to $38 billion in 2020.
Don't Be Them, Be Better
There is a population of people waiting with their arms folded for the day when Bitcoin goes to $0.00, so they can say, "See, I told you so." Don't be one of those people, be better. As I've written before, we're more than a decade into Bitcoin and cryptocurrencies, it's safe to say they are going to be around for a while. Don't fight it, profit from it.
Coinbase will be another way to profit from the popularity of cryptocurrencies.
Times Are Changing, Crypto is the Future
I often discuss how much the world has changed with my daughter. It's a fun way for me to reminisce and to teach her to acknowledge change when she sees it and to try to get ahead of it. One of the stories she laughs at the most is when TV stations used to sign off. Fox, NBC, ABC, used to sign off in the early AM hours and they would resume broadcasting around 6AM. Those that didn't sign off just aired infomercials during the early AM hours. My daughter can't fathom this because all she has known is TV content 24/7.
Financially, I like to tell her about the first ATMs and ATM cards, the ones without the Visa and Mastercard logos. With those first cards all you could do is check your balance and get cash at the ATM. If you wanted to make a purchase, you went to the ATM, withdrew the cash, then went to the store to make your purchase. It seems so primitive compared to what we have now, but then, when banks didn't open on the weekend, and very few were opened past 5PM on weekdays, the ATM and the ATM card was a game changer. My daughter and people her age know nothing about that old ATM life that required you to walk around with a bundle cash.
What we consider to be money, what we consider to be a store of value, what we consider to be a financial institution, all of those things are changing right before our eyes. A five year old in 2021 doesn't know life without cryptocurrencies, like my daughter doesn't know what an ATM card without a Visa or Mastercard logo looks like. Whatever it is about cryptocurrencies that makes older people uncomfortable, that will be gone in 15 years. Kids who are in elementary school today will utilize cryptocurrencies much more in 2031 than we do today, and when this happens, you'll wonder why you didn't invest in Coinbase all of those years ago.