Coinbase, one of the most trusted cryptocurrency exchanges in the world, experienced tremendous growth in Q1 of 2021 as the exchange is set for its IPO next week. Coinbase released their Q1 earnings this week, which gained some notice. People went absolutely ballistic on the exchange’s astounding growth in comparison to last year.
Let’s see how Coinbase performed in Q1 as it heads into its IPO next week.
Coinbase – founded in 2012 – is the largest and most popular cryptocurrency exchange in the U.S. At the time of writing, Coinbase has 56 million verified users. The exchange is important for the U.S. market because it provides a simple way for retail investors, as well as large institutions, to purchase cryptocurrencies in a trusted manner.
Coinbase is fairly straightforward and perfect for beginners in this space. They do a very good job appealing to their users through their user-friendly, simple UI.
Coinbase offers another trading platform called “Coinbase Pro” for more experienced investors in this space. Here, investors can find all of the features they would typically find on more advanced exchanges, as well as charts.
Coinbase’s Different Revenue Streams
Before diving into Coinbase’s earnings for Q1 of 2021, it is important to understand how they make money.
- Coinbase fee – This is a commission fee Coinbase charges – similar to what you would see on other centralized exchanges or stock exchanges.
- Margin fee – This fee is calculated by the price you were quoted and the actual price once the order is filled (roughly .50% for crypto buy/sell transactions).
- Credit transaction – 2% of the total transaction.
- Staking – 25% fee.
- Deposit fees – The percentage for these fees vary by location.
Having these different lines of business bringing in multiple revenue streams, along with a user-friendly UI, has helped propel Coinbase ahead of its competitors in the U.S. market.
Coinbase 2021 Q1 Earnings
Let’s take a look at how Coinbase has performed since the start of this year.
- Revenue: $1.8 billion (207.6% growth over Q4 of 2020), earning more in the first three months of this year than all of last year (2020 revenue: $1.3 billion) combined. Below is a chart to put into perspective how big of a quarter Coinbase had in regards to revenue.
- Net Income: $730 million (low estimate) and $800 million (high estimate). This is roughly 313% growth over Q4 of 2020.
- Adjusted EBITDA: $1.1 billion.
- Verified Users: 56 million (+13 million users in comparison to the end of 2020).
- Monthly Transacting Users (active users): 6.1 million (+3.3 million users in comparison to the end of 2020). Below is a visual representation of the massive growth in monthly active users on the Coinbase platform.
On April 1st, Coinbase announced that they are expecting their direct listing to occur on April 14, 2021, with a Class A common stock trading on the NASDAQ under the ticker name “COIN.” Briefly, Class A shares are shares that carry more voting rights than Class B shares.
Coinbase decided to do a direct listing rather than do the traditional hiring of an investment bank to handle the IPO. This is the same method Spotify chose for their IPO. This method helps cut out paying large expenses to an investment bank. One thing to note – since Coinbase will be using a direct listing rather than hiring an investment bank to underwrite the stocks, there may be more initial volatility once COIN is available for purchase to the general public.
Nerdwallet states an earlier filing indicated nearly 114.9 million shares were registered for trading, and shares traded at an average price of $344 on the private market during Q1. It’s almost certain that COIN will be trading north of $350 – possibly in the $400 region – once it is initially listed for the general public to purchase.
Coinbase shows tremendous strength as its growth in Q1 was massive. This growth may bring a lot of interested investors into the IPO of COIN. We also think this IPO is huge for bringing traditional stock investors into the cryptocurrency space. Thus, bolstering mainstream adoption of the cryptocurrency market. With Coinbase being listed on an American stock exchange, the stigma around cryptocurrency may begin to slowly die down as national governments will realize the importance of it and the growth it can bring to all nations.
Join us on Telegram to receive free trading signals.
For more cryptocurrency news, check out the Altcoin Buzz YouTube channel.