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Coinbase, a cryptocurrency trading platform founded in 2012, has gone directly listing on Nasdaq on 14 April 2021 for $ 99.6 billion. The listing allows a crypto exchange firm to be on par with stocks, gold, and other asset classes. Coinbase has chosen its listing in the Nasdaq listing and major technology giants like Microsoft, Apple, Amazon, and Tesla.
After the market giant Binance, Coinbase is the largest crypto trading platform with verified 56 million users offering 50 different currencies in its platform to buy and sell. Coinbase has traded a volume of more than $47 billion in 24 hours, according to CoinMarketCap.com.
Bears against Coinbase valuation
Considering the volatility of cryptocurrency skeptics says valuation of Coinbase higher even bullish experts conclude that Coinbase stock comes with its risk.
MarketWatch says that Coinbase is ridiculously overvalued and should be an $18.9 billion 81% decrease in the $100 billion valuations. It estimates in 10 years, and its profit margin will fall to yearly 21% of Nasdaq’s annual rate.
The ideal zero transaction fee cryptocurrency is a major hit for the Coinbase platform. In 2020, revenue totaled $1.28 billion, 96 % of the revenue is from transaction fees. Competition in crypto trading platforms can have a serious impact on profits generated. Coinbase charging higher transaction fees than many of its competitors is not a good sign for investors.
Coinbase spends a big chunk of its profits on marketing expenses.
Coinbase spent 12% to 15% of net sales on marketing in the first quarter of 2021, three times higher than it spent in 2020.
Cryptocurrencies are still not mainstream in the market; adoption would need more innovations in the coming years and more companies offering unique solutions. This would make Coinbase compete with more number companies for lesser transaction fees.
Other crypto exchanges on the road towards IPO
Coinbase is the first US-based crypto exchange company to become publicly traded. It is monumental in the journey of cryptocurrency.
Including Kraken, Gemini, Epiphany, Bakkt, BlockFi are other crypto exchanges to go on an initial public offering, according to street.com.
This would allow investors confidence and further help cryptocurrency to come to the mainstream world.
