Coinbase, a regulated cryptocurrency exchange and depository, is tipped to have a market capitalisation of around US$100 billion when it lists on the Nasdaq on Wednesday.
The company, which operates without an official physical headquarters, is not offering an initial public offering, instead using a direct listing of its stock instead. This will allow current investors to sell their shares to new investors once the stock goes public. Coinbase, founded by 38-year-old former Airbnb software engineer Brian Armstrong, who is CEO, and former Goldman Sachs trader Fred Ehrsam, has been valued at US$91.5 billion and is tipped to edge close to or above US$100 billion when trading. Facebook was valued at US$104 billion when it went public in 2012.
Armstrong owns 39.6 million shares, according to the company’s updated prospectus. Assuming Coinbase’s private trading is indicative of where the stock will open, Armstrong will become the newest member of a growing group of tech decabillionaires, headlined at the top by Amazon Founder, Chair and CEO Jeff Bezos, Tesla CEO Elon Musk, Microsoft Co-Founder Bill Gates, Facebook’s Mark Zuckerberg and Google Founders Larry Page and Sergey Brin, who are all worth over US$100 billion.
DA Davidson analyst Gil Luria updated his price target for the stock to US$440 before shares even start trading. Adding to that, this is a massive jump over the analyst’s previous price target of US$195 per share for the stock.
In the first three months of the year, Coinbase made US$730 million in profit (compared to US$31.9 million in 2020) on revenues of US$1.8 billion (from US$190.6 million) 12 months earlier, bolstered by Bitcoin’s staggering rise. Bitcoin’s price has risen to roughly US$58,000 per token. It said it secured 13 million new users in the first three months of 2021. Armstrong said that the company has been profitable since 2017.
Almost all of Coinbase’s revenue is generated from taking a cut on customers’ transactions of cryptocurrencies.
Armstrong took home US$59.5 million in total compensation last year, according to Coinbase’s filing to the Securities Exchange Commission. However, US$56.7 million was in the form of options. Armstrong also received US$1.8 million in compensation for costs pertaining to “personal security measures”, according to the filing.
Armstrong’s total compensation package took him above that of Jamie Dimon, CEO and President of JPMorgan Chase, the biggest bank in the US, whose compensation package amounted to US$31.5 million.
