Coinbase has revealed that it generated more than $3.4 billion in revenue and earned net income of $322.3 million in 2020.
That represents a significant improvement on the previous year, when the firm brought in revenue of $534 million and made a loss of almost $30 million. Coinbase also revealed that it has 2.8 million active monthly users, and that quarterly trading volume more than doubled between 2018 and 2020.
The revelations came in public documents filed with the Securities and Exchanges Commission as it prepares for an IPO. The popular crypto exchange intends to list its Class A common stock on the Nasdaq Global Select Market under the ticker symbol “COIN”.
A draft of the company’s S-1 registration statement was initially filed in December, and an updated version has now been made public. It acts as a pitch to investors, explaining that revenues are soaring and that it is in profit.
Coinbase reported operating expenses of $868.5 million in 2020, up from $579.5 million the year before. “We have grown quickly and in a capital-efficient manner since our founding,” said the firm in its filing.
The filing is full of intrigue. Goldman Sachs, Citigroup, JPMorgan and Allen & Co. all acted as advisors on the IPO. There is also a borrow and lend scheme to look forward to, defined as a “flexible, non-purpose 12-month term loan that allows retail users to borrow US dollars using their crypto assets as collateral”, meaning you can essentially harvest yield on crypto assets as a basis trade.
It also revealed that Coinbase has no physical address, although it has always been headquartered in San Francisco. The business was created in 2012, and its stated mission is to “create an open financial system for the world”. Demand for its services is likely to have spiked in 2021 due to the bull run that Bitcoin and the wider crypto market has enjoyed.
One interesting detail that emerged from the filing concerns the identity of pseudonymous Bitcoin creator Satoshi Nakamoto.
The true identity of Nakamoto has never been revealed. Some people believe it is an individual, while others claim it is a group of people. Few people believe Craig Wright when he claims to be Nakamoto.
If Nakamoto’s identity is ever revealed, Coinbase believes it could “adversely affect” markets for Bitcoin, Ethereum and other coins.
Nakamoto is thought to hold around 1.1 million BTC, worth around $50 billion right now. If those Bitcoins are transferred, it could send shockwaves throughout the crypto universe. Yet they could be lost forever if Nakamoto is dead.
Coinbase’s IPO filing also notes that any “negative perception of bitcoin or Ethereum” could be another factor that affects its pricing.
We do not yet have a date for Coinbase’s direct listing, but it has an assumed value of $100 billion based on the average clearing price for shares on Nasdaq Private Market. That means it would trade for around 77 times its trailing 12-month sales, and roughly 310 times earnings.