Coinbase Stock: A Guide To Investing In The Crypto Exchange

Coinbase is a US-based cryptocurrency exchange that went public on April 14, 2021, and is listed on the NASDAQ stock exchange under the ticker COIN. As with buying any stock, you can use a broker to place an order. Coinbase shares can be purchased through online brokers like E*TRADE or apps like Robinhood. Alternatively, you can buy the COIN/BUSD trading pair on Binance. Before investing, it is important to do your research and understand the risks involved.

Coinbase's business model

• Trading fees: Coinbase charges a commission fee for users to trade cryptocurrencies on its platform. The fee structure is tiered, varying based on location and transaction volume.
• Credit card transaction fees: Coinbase issues a Visa debit card that users can use to spend their cryptocurrencies. The company earns a payment fee whenever the card is used.
• Custody service: Coinbase offers a service to hold and store crypto-related assets on behalf of its customers, charging an implementation fee of up to $10,000 and an annual custody fee of 50 basis points.
• Interchange fees: Similar to other credit card providers, Coinbase charges interchange fees whenever a user makes a payment with their card.
• Interest on cash: Coinbase lends out the cash residing in its users' accounts to other institutions and collects interest from them.
• Sales of software tools: Coinbase offers various software tools and platforms, such as Coinbase Pro and Prime, aimed at professional traders, which are free to use but incur fees for buying and selling currencies.
• Interest on personal loans: Coinbase offers personal loans to users, with their crypto holdings as collateral, and charges an 8% annual interest rate on these loans.
• Referral fees for promoting courses: Coinbase offers educational courses about cryptocurrencies, and users are rewarded with these currencies upon completion. It is assumed that Coinbase charges a referral fee for promoting these unknown currencies.
• Profits from venture investments: Coinbase has a dedicated investment team, Coinbase Ventures, that invests in early-stage companies in the blockchain and cryptocurrency space. While the primary goal is not to make a profit, the venture unit may sell shares in these companies for a profit.

Coinbase's financial history

Coinbase has had a turbulent financial history since its founding in 2012 by Brian Armstrong, a former Airbnb engineer, and Fred Ehrsam, a former Goldman Sachs trader. The company is a distributed company, with all employees operating remotely.

In its early years, Coinbase quickly grew to one million users by 2014, and by 2018, it had formed an early-stage venture fund, Coinbase Ventures, focusing on blockchain and cryptocurrency investments. The company has also expanded its offerings to include over 250 different cryptocurrencies for U.S. customers, although it does not trade Monero and other cryptocurrencies with enhanced anonymity protection due to KYC requirements and anti-money laundering regulations.

In 2020, during the COVID-19 pandemic, Coinbase shifted to a completely remote work model and acquired several companies, including the digital asset trading firm Tagomi for between US$75 and $100 million. In 2021, Coinbase became a public company on the Nasdaq exchange via a direct stock listing, with a reference price of US$250 per share, giving it an estimated value of US$47 billion. Its shares debuted at $384, and by the end of its first day of trading, it closed at US$328.28 per share.

However, in 2022, Coinbase faced challenges due to the global downturn in cryptocurrencies and services, leading to the announcement of layoffs of approximately 18% of its workforce. The company also faced regulatory scrutiny, with the U.S. Securities and Exchange Commission threatening to sue if it launched a planned cryptocurrency lending product. Despite these setbacks, Coinbase continued to expand its partnerships, announcing a collaboration with BlackRock in August 2022, allowing BlackRock clients to manage their Bitcoin exposure through BlackRock's investment management system.

In January 2023, Coinbase faced further difficulties, announcing layoffs of around 950 employees due to the potential for "further contagion" following the collapse of the FTX exchange. The company also received a Wells notice from the SEC, signalling potential enforcement action over its staking products. Despite these challenges, Coinbase remains a significant player in the cryptocurrency exchange market, with a large user base and a diverse range of products and services.

Coinbase's IPO

Coinbase has chosen to go public via a direct listing, a relatively new option for companies, rather than a traditional IPO. This is an unusual transaction where no new shares are issued or sold – they simply start trading. Coinbase is the largest company to go public via direct listing.

In a direct listing, there is no pre-set price decided by investment bankers. Instead, the market on the initial trading day influences the starting price. On the day of initial trading, there is a 10-minute “display-only” period in which interested buyers enter their bids, and sellers (Coinbase’s existing shareholders) enter their offers.

Direct listings do not have traditional lockup periods that prevent insiders from selling shares for the first six months after the listing. Coinbase’s listing on the Nasdaq stock exchange gives traditional investors, who may be interested in digital currencies but are unable or unwilling to buy them directly, an indirect way to buy into the market.

If you want to invest in Coinbase stock, you can use your current brokerage account if you have one. If not, you will need to choose a broker and open a brokerage account. You will then need to decide how many shares you want to purchase, based on the total amount of money you can afford to invest. Remember never to invest more money than you can afford to lose, as stock prices can dip suddenly and without warning. You can then create an account and go to a trading platform, search for 'Coinbase', select 'buy' in the deal ticket, and choose your position size and take steps to manage your risk. You can also place a limit order, which tells your broker that you want to buy a select number of shares at or below a specified price.

Coinbase's share price

Coinbase (COIN) is a US cryptocurrency exchange that went public on April 14, 2021, via a direct listing on the Nasdaq exchange. Coinbase is the first US crypto company to go public, allowing investors to gain exposure to Bitcoin and other aspects of the fast-growing sector.

Coinbase's business model is based on two core products: a Global Digital Asset Exchange (GDAX) for trading cryptocurrencies and a user-facing platform for buying and selling bitcoin, bitcoin cash, ether, litecoin, and others. The company offers over 25 cryptocurrencies and charges a commission fee for users to trade on its platform.

When Coinbase went public, it was valued at around $8 billion, but experts estimate the company might have been worth nearly $90 billion during price discovery between inside investors. Coinbase's estimated market cap at the time of its listing was expected to be around $75 billion, which would have made it one of the largest listings in history.

As with any stock, it is essential to understand the risks involved before investing. Coinbase has a history of volatile expectations from investors, and the inherent instability of the cryptocurrency market can impact its share price.

Coinbase's competitors

Coinbase is a US-based cryptocurrency exchange that allows individuals to buy Bitcoin on an exchange instead of mining it. It is the first US crypto company to go public, and its shares trade on the NASDAQ under the ticker COIN.

Coinbase has established itself as the best-known cryptocurrency company in the world, with a stronghold on the crypto market in the United States. However, it faces competition from several other cryptocurrency exchanges and brokers. Here are some of Coinbase's competitors:

Robinhood

Robinhood is a well-known competitor to Coinbase, offering commission-free trading and a simple, streamlined trading platform. Robinhood has expanded into crypto markets and offers access to both the stock and crypto markets.

Kraken

Kraken is another major competitor to Coinbase, known for its security and compliance with regulatory standards. Kraken is a US-based company, founded in San Francisco, and is one of the largest and well-known cryptocurrency exchanges. It offers a wide range of cryptocurrencies and provides advanced trading features such as margin trading and derivatives.

Binance

Binance is the largest cryptocurrency exchange by trading volume, offering over 350 coins. It is known for its innovation, having launched one of the industry's first crypto derivatives platforms. However, it has faced regulatory issues in some jurisdictions, including the US, where it offers a stripped-down version of its trading portal.

PayPal

PayPal allows its users to buy and sell major cryptocurrencies and is known for its low fees and no commission structure.

Gemini

Gemini is a New York-based cryptocurrency exchange founded by the Winklevoss twins. It is known for its strict adherence to regulatory standards and has gained a reputation as one of the most secure and compliant exchanges in the industry.

Bitstamp

Bitstamp is a London-based cryptocurrency exchange that meets strict regulatory standards. It is one of the oldest and most established exchanges, having been founded in the early years after Bitcoin's emergence.

These competitors to Coinbase vary in terms of the number of coins offered, trading volume, security, and regulatory compliance. While Coinbase has established itself as a leading player in the cryptocurrency exchange industry, it faces intense competition from both established and emerging platforms.

Frequently asked questions