Coinbase made history on April 14, 2021, by successfully listing on the NASDAQ exchange for billions of dollars.
All Coinbase employees are remote, and the company lacks a physical headquarters, so this was remarkable. It also signaled that the Crypto industry has come of age and is now considered mainstream by one of the world’s biggest stock exchanges.
One year later, is the optimism that the Coinbase IPO generated still warranted? It’s worth taking a look.
Coinbase IPO via Direct Listing Was a Success
When Coinbase went public in April 2021, the value of a Coinbase share briefly shot up to $429.54 at one point on listing day. This briefly valued the company at over $100 billion, according to CNBC.
The party didn’t last long, however.
Coinbase shares have since fallen to the “coin basement” as one year later, a Coinbase share currently trades for at around $90 while the company’s value wallows at around $25 billion.
Coinbase Shares Have Fallen: What Happened?
There are at least three reasons why Coinbase isn’t doing as well as expected at this point.
1. Cryptocurrencies Have Plummeted
After losses in the crypto industry, the value of all cryptocurrencies has fallen by over 60%. As Reuters notes, the crypto industry has declined from a high of $2.9 trillion in 2021 to below $1 trillion in 2022. If the regular stock market experienced such a blowout, the economy would be in a serious recession.
It was inevitable that Coinbase shares would fall in tandem with the value of cryptocurrencies.
2. Lower Revenues
Coinbase relies on commissions from trades to make money. According to the Coinbase Shareholder letter, its net revenue was $1.2 billion, while total expenses were $1.7 billion in the first quarter of 2022—Coinbase lost $500 million.
A decline in total trading volume drove the loss to $309 billion, a decrease of 44% compared to the previous quarter (although this was consistent with trading volume declines across the crypto industry, which also fell 44%). Coinbase also lost 2.2 million monthly active users.
Paradoxically, Coinbase expanded its trading volume market share in seven of the top ten assets traded on Coinbase.
In addition, because Coinbase’s commissions-based revenue will undoubtedly come under pressure from rivals like Binance, FTX, Gemini, and Kraken in the coming months and years, investors have gotten spooked.
3. SEC Investigation
According to Bloomberg, the Securities and Exchanges Commission has launched an investigation of Coinbase for allegedly facilitating the illegal trade of digital assets that qualify to be securities. The SEC is also investigating a Coinbase employee for insider trading.
This has also spooked investors. As a result, many have sold off Coinbase shares and depressed shares of Coinbase further.
Coinbase Is Not Too Worried
Coinbase doesn’t seem too worried about its future. After such a dismal year, you would expect it to lay off staff. Instead, according to its shareholder letter, Coinbase has added 3,200 employees overall.
We ended Q1 with 4,948 full-time employees, up 33% from last quarter… Over the past twelve months, we have added over 3,200 net new employees…. Our growing team gives us additional resources for product development and execution, as well as customer support, compliance, and more, which we believe serve as long-term competitive advantages for us
In addition, Coinbase expects to be well served by products such as Coinbase Wallet, Coinbase NFT marketplace, and its expansion of staking on the platform through the addition of Cardano.
It also has billions of dollars in cash and assets.
Coinbase Will Be Just Fine
Cryptocurrencies have come a long way and now enjoy wide adoption in all major economies outside of China, Russia, India and Turkey.
There is no turning back on crypto globally. Therefore, so as long as Coinbase gets its big bets right, it will probably thrive in the long run.
Cryptocurrency Marketplace Direct Listing 1 Year On & Latest News Update
Cryptocurrency Marketplace Direct Listing 1 Year On & More Live News
All this news that I have made and shared for you people, you will like it very much and in it we keep bringing topics for you people like every time so that you keep getting news information like trending topics and you It is our goal to be able to get
all kinds of news without going through us so that we can reach you the latest and best news for free so that you can move ahead further by getting the information of that news together with you. Later on, we will continue
to give information about more today world news update types of latest news through posts on our website so that you always keep moving forward in that news and whatever kind of information will be there, it will definitely be conveyed to you people.
Cryptocurrency Marketplace Direct Listing 1 Year On & More News Today
All this news that I have brought up to you or will be the most different and best news that you people are not going to get anywhere, along with the information Trending News, Breaking News, Health News, Science News, Sports News, Entertainment News, Technology News, Business News, World News of this made available to all of you so that you are always connected with the news, stay ahead in the matter and keep getting today news all types of news for free till today so that you can get the news by getting it. Always take two steps forward
Credit Goes To News Website – This Original Content Owner News Website . This Is Not My Content So If You Want To Read Original Content You Can Follow Below Links