On April 14, Coinbase will become the first US-based cryptocurrency platform to roll out its IPO on the Nasdaq stock exchange under the ticker ‘COIN’. Nearly a week before its IPO rollout, the company posted total revenue of $1.8 billion.
The investors’ sentiment around the much-anticipated initial public offering (worth $114.9 million) of Coinbase, a cryptocurrency exchange platform, received an impetus after the company released its first-quarter earnings on Tuesday (April 6). The impressive revenue figures of the US-based company paved the way for a strong debut on the Nasdaq, according to market analysts.
What does the company do?
Founded in 2012 by former Airbnb Inc engineer Brian Armstrong and former Goldman Sachs Group Inc trader Fred Ehrsam, Coinbase provides a platform for the buying and selling of Bitcoin along with 29 other cryptocurrencies. Valued at $68 billion as of March 2021, the company makes money by charging a transaction fee every time user buys, sells, or exchanges cryptocurrency. Coinbase runs on both Android and iOS.
Why Q1 earnings of Coinbase impact its share price?
Nearly a week before its IPO rollout, the company posted total revenue of $1.8 billion and a net income of approximately $730 million to $800 million. It also showed 56 million verified users.
Experts say that the Q1 revenue figures — which are higher than what the company made in the last two years combined — build a strong narrative around the Coinbase IPO and can thus, influence the value of its shares.
How to weigh buying Coinbase stocks?
There is often a cloud of suspicion around cryptocurrency exchange platforms. However, the Coinbase IPO is a step towards its legitimacy. Further, the more-than-healthy revenue figures make a strong case for Coinbase stocks.
Nonetheless, the future of Coinbase is linked to that of Bitcoin and other cryptocurrencies. Thus, it is advisable to consider the future of cryptocurrencies before you purchase the stock.