Coinbase, one of the most popular and biggest Cryptocurrency exchanges in the world, went public on 14 April 2021. It is listed on Nasdaq with the symbol COIN. Many experts have predicted that the company would be valued at up to $100 billion.
Unlike the conventional initial public offering process, the company has chosen a direct listing. The existing shareholders offered their shares through the exchange. So, if you are thinking of investing in the IPO of Coinbase, you should read this article till the end. Before that, we will discuss a few things about the Crypto trading platform.
Coinbase: Overall Best Crypto Exchange
Since 2012, Coinbase has been serving as one of the top crypto exchanges with end-to-end encryption security features. Coinbase offers one of the best platforms for trading different Cryptocurrencies including Bitcoin, Etherium, Litecoin, etc.
No matter which digital currencies do you invest in, you should consider Bitcoin because the platform offers the best Bitcoin pairs. Remember, the real bitcoin trader always refers to the price of Bitcoin before making any investment in other Cryptocurrencies. Now, let’s discuss the things you need to know about Coinbase’s IPO.
Things To Know About Coinbase’s IPO
Considering the revenue metrics and risk factors will be helpful to decide whether you should invest in the initial public offerings of Coinbase. So, I recommend you to go through the article till the end.
Revenue Metrics Of Coinbase
Understanding the revenue metrics will give you some insights into how the company is performing. If you compare the revenue of the last three months, it’s more than the total revenue for the year 2020. As per the report, there are more than 56 million verified users by the end of March 2021. The quarterly trading volume is around $335 billion which is a great start in 2021.
Since its inception till the year 2020, the total revenue of the company has crossed $3.4 billion. This revenue mainly came from transaction fees for volume-based trades by retail and institutional investors. From the above-presented data, it seems a good opportunity to invest in Coinbase’s IPO. However, you shouldn’t invest without understanding the risk factors involved in it.
When you plan to invest in a particular asset, it’s always a good thing to analyze the positive as well as negative factors. As you know that Crypto assets are highly volatile, the quarterly revenue can fluctuate largely.
It depends on the market sentiment and the performance of the crypto industry how profitable it is to invest in Coinbase’s IPO. Coinbase in its filing to the US Security Exchange Commission mentioned that if demand for Bitcoin and Ethereum declines, it can adversely affect the value of the share price of Coinbase.
Another important point to note that the operating costs of Coinbase are going to increase and it can be hard for the company to be profitable in the foreseeable future. As per the company’s prediction, it may not achieve a positive cash flow from its operations consistently.
Should You Invest?
Even if Coinbase is one of the top crypto exchanges in the world, the crypto industry itself is young. So, it’s crucial for retail investors to take caution while planning to invest in the IPO or even in Crypto assets.
Remember, people get excited about investing in an IPO. But many investment advisors suggest going for good company shares instead of IPOs. So, if you want to invest in Coinbase’s IPO, you should invest a very small percentage of your capital which you can afford to lose without any hesitation.
Hopefully, the above information has helped you to know about Coinbase’s IPO. From the above-presented facts, it’s clear that Coinbase has performed very well in the first quarter of 2021. However, you shouldn’t neglect the risk factors before deciding to invest in its IPO. As mentioned above, the quarterly result can fluctuate largely from quarter to quarter, you should think twice before investing in it.