A profit of more than $322 million and 43 million users, of which 2.8 million make transactions each month. In 2020, Coinbase has benefited greatly from the period of strong growth in Bitcoin.
Brian Armstrong, co-founder and CEO of Coinbase. Getty – Matt Winkelmeyer
The Coinbase encryption trading platform will go public via a direct listing, a method that avoids the use of financial intermediaries, but does not allow for the raising of funds. On this occasion, the Californian company headed by Brian Armstrong submitted the traditional Form S-1 to the Securities and Exchange Commission (SEC) on Thursday, February 25, 2021. This allows us to see Coinbase’s good financial health ahead of its arrival on the Nasdaq, one of the most eagerly awaited IPOs of the year, in a context where cryptomoney, and particularly Bitcoin, have seen their prices skyrocket for almost a year.
As a result, the company recorded sales of approximately $1.28 billion in 2020 and net income of more than $322 million. In 2019, it had sales of $534 million and losses of more than $30 million. At the end of 2020, the trading platform for bitcoins, ethereums and litecoins, among others, had 43 million users (compared to 32 million in 2019), of which 2.8 million traded every month (1 million in 2019). Bitcoin and ethereum accounted for more than half of the transaction volumes.
456 billion traded on Coinbase
Founded in 2012, Coinbase initially offered a simple platform for purchasing bitcoins. The company, which has raised more than $547 million and made at least 15 acquisitions over the years, has subsequently added a professional trading platform and banking services to its offering. As of December 31, 2020, no less than $456 billion had been traded on the platform since its inception. The company, which is also reported to hold $316 million in cryptoactives in 2020 (up from $34 million in 2019), derives most of its revenue from trading commissions.
In short, Coinbase, which recently reached $100 billion, has benefited greatly from the period of growth in Bitcoin – and the other crypto-currencies in its wake – that began in the spring of 2020 and continues today. After dropping below $5,000 in March 2020, Bitcoin’s value is now around $50,000. In the meantime, there has been a halving of the reward for mining bitcoin that has created more scarcity, a global pandemic that has increased the safe-haven value of bitcoin, a growing number of uses for the underlying blockchain technology, and increasing investment by financial institutions. More recently, players such as PayPal and Square have also entered the arena. Then Tesla invested $1.5 billion in the famous cryptomony and its boss Elon Musk discovered that he could change the price of it with a simple tweet.
« You can expect volatility in our financial results given the price cycles in the cryptomoney industry, » warned Coinbase CEO Brian Armstrong in the S-1 form. « This does not come as a surprise to us, as we have always taken a long-term perspective on the adoption of cryptos, » he described. This will allow Coinbase to « make a profit when revenues are high [and] lose money when revenues are low. He also signalled Coinbase’s intention to further diversify its business with other products and services.