Coinbase Stock: A Guide To Investing In The Crypto Exchange

Coinbase is a US-based cryptocurrency exchange that went public on April 14, 2021, allowing investors to buy its shares on the NASDAQ stock exchange under the ticker COIN. As the first US crypto company to go public, Coinbase's IPO marked a significant milestone for the cryptocurrency industry, offering investors a novel opportunity to gain exposure to Bitcoin and other aspects of the burgeoning sector.

Prior to its IPO, Coinbase shares were sold on the secondary market at $373 per share, valuing the company at $100 billion. Coinbase's stock price debuted at $384 and has since traded as high as $440.

If you're interested in investing in Coinbase stock, you can follow these steps:

1. Open a brokerage account with a platform that offers NASDAQ access, such as Fidelity, Robinhood, Etrade, or Charles Schwab.

2. Fund your brokerage account using a bank transfer, debit card, or credit card.

3. Search for Coinbase on the platform using its ticker symbol, COIN.

4. Choose an order type, such as a market order or a limit order, specifying the number of shares or the dollar amount you wish to invest.

5. Submit your order, and the broker will execute it according to your instructions.

Coinbase's business model

• Trading fees: Coinbase's primary source of revenue is the fees it charges for buying and selling cryptocurrencies. The company applies a tiered commission structure, with fees varying based on location and transaction volume.
• Credit card transaction fees: Coinbase offers a Coinbase credit card that users can obtain for free. The company earns a payment fee whenever a customer uses the card.
• Interchange fees: Similar to other credit cards, Coinbase charges interchange fees whenever a customer uses their card for payments.
• Custody service: Coinbase Custody is a service that holds and stores crypto-related assets on behalf of other parties. The company charges an implementation fee of up to $10,000 and an annual custody fee of 50 basis points.
• Interest on cash: Coinbase lends out the cash residing in its user accounts to other institutions and collects interest from them.
• Sales of software tools: Coinbase offers various software tools, such as Coinbase Analytics and Coinbase Commerce, which generate revenue through sales or subscriptions.
• Interest on personal loans: Coinbase offers personal loans to users, with their crypto holdings as collateral. The company charges an 8% APR rate on these loans.
• Venture investments: Coinbase Ventures is a dedicated investment team that invests in early-stage companies in the blockchain and cryptocurrency space. While the primary goal is not profit, the venture unit may sell shares in these companies for a profit.

How to open a brokerage account

Opening a brokerage account is the first step towards investing in stocks. A brokerage account is an investment account used to purchase investments such as stocks, bonds, mutual funds, and ETFs. Brokerage accounts can be opened quickly online and typically don't require an upfront deposit, though you will need to fund the account before you can buy investments.

• Choose a broker: Select a broker that suits your needs and offers the type of trading platform you are looking for. Consider factors such as commissions and fees, the trading platform, and access to additional markets.
• Complete the application: You can typically complete the application process online within 15 minutes. Provide the required personal, employment, and financial information, including your Social Security Number, employer's details, and annual income.
• Fund your account: After opening the account, deposit or transfer funds before you start investing. You can link your bank account or use other methods such as wire transfer or check deposit.
• Understand the features and risks: Familiarize yourself with the features and risks associated with your brokerage account. This includes understanding the difference between a cash account and a margin account, where the former allows you to use deposited cash to buy investments, while the latter involves borrowing money from the broker, which can be risky.
• Choose your investments: Once your account is funded, select the investments that align with your goals and time horizon. Utilize any educational tools provided by your broker to make informed choices.
• Place your orders: Decide on the number of shares and the type of order you want to place (e.g., market orders or limit orders). Submit your order details, and the broker will execute the trade according to your instructions.

Coinbase's financial history

Coinbase has had a turbulent financial history since its founding in 2012.

In 2013, the company received a $5 million Series A investment, followed by a $25 million investment later that year. In 2014, Coinbase grew to one million users and acquired several companies, including the blockchain explorer service Blockr and the web bookmarking company Kippt. The company also partnered with major firms such as Overstock, Dell, and Expedia, allowing them to accept bitcoin payments.

In 2015, Coinbase received a $75 million investment and launched a U.S.-based bitcoin exchange for professional traders. The company expanded its services to Canada and Singapore in 2015 and rebranded its Coinbase Exchange as the Global Digital Asset Exchange (GDAX) in 2016.

In 2017, Coinbase obtained a BitLicense and was licensed to trade in Ethereum and Litecoin. However, in the same year, the company faced an insider trading investigation due to price abnormalities on its platform.

In 2018, Coinbase formed an early-stage venture fund, Coinbase Ventures, and made its first investment in Compound Labs, a start-up building Ethereum smart contracts. The company also launched Prime, a platform for institutional customers.

In 2019, Coinbase acquired the "blockchain intelligence platform" Neutrino for an undisclosed price, which raised concerns among some users due to the Neutrino founders' connection to the Hacking Team. In April of that year, a U.K. corporate filing revealed that Coinbase's non-U.S. revenue grew by 20% to $173 million in 2018, with a net profit of $6.6 million.

In 2020, during the COVID-19 pandemic, Coinbase shifted to a remote-first model and acquired the digital asset trading firm Tagomi for $75-$100 million. The company also faced internal backlash after CEO Brian Armstrong initially refused to make a statement about Black Lives Matter, citing the company's apolitical culture.

In March 2021, Coinbase reported a nine-fold increase in first-quarter revenue, reaching $1.8 billion, attributed to the rise in Bitcoin's price. On April 14, 2021, Coinbase became a public company on the Nasdaq exchange, with a reference price of $250 per share, giving the company an estimated value of $47 billion.

In 2022, Coinbase faced a challenging year with the global downturn in cryptocurrencies, resulting in the announcement of layoffs for approximately 18% of its workforce. The company also faced a net loss of $1.1 billion in the second quarter of 2022.

In 2023, Coinbase received a Wells notice from the U.S. Securities and Exchange Commission (SEC), indicating potential enforcement action over its staking products. Despite these challenges, Coinbase continued to expand its partnerships, announcing a collaboration with BlackRock in August 2022, allowing their clients to manage their Bitcoin exposure through BlackRock's investment management system.

Coinbase's share price volatility

Coinbase share price volatility is a key consideration for investors. As a cryptocurrency exchange, Coinbase's share price is impacted by the volatility of the crypto market. Cryptocurrencies are widely considered to be a volatile asset class due to their relatively short history and the potential for significant upward and downward movements over shorter time periods.

Coinbase's decision to pursue a direct listing, rather than a traditional IPO, also contributed to increased volatility. In a direct listing, there is no target price range set by an underwriter, and share prices are solely determined by market demand. As a result, Coinbase's share price was highly volatile during its debut, trading as high as $440, significantly above the initial reference price of $250.

The inherent volatility of the crypto market, coupled with the dynamics of a direct listing, resulted in significant price fluctuations for Coinbase shares. This volatility presents both risks and opportunities for investors. On one hand, it creates the possibility for higher returns; on the other, it also increases the potential for losses over shorter periods.

To assess Coinbase's share price volatility, investors can use technical analysis and fundamental analysis. Technical analysis involves examining chart patterns, technical indicators, and historical price action. Fundamental analysis, on the other hand, focuses on the company's financial fundamentals, such as revenue and profit and loss statements.

It's important to note that Coinbase's share price volatility may be mitigated by certain factors. For instance, higher trading volumes on Bitcoin and increased institutional participation could contribute to reducing volatility over time. Additionally, Coinbase's diverse business model, which includes revenue streams beyond transaction fees, may provide some stability to the company's share price.

In summary, Coinbase's share price volatility is influenced by the inherent volatility of the crypto market and the dynamics of its direct listing. This volatility presents both risks and opportunities for investors, and it can be assessed through technical and fundamental analysis. While volatility may be mitigated by certain factors, it remains an important consideration when investing in Coinbase stock.

Coinbase's customer service

Coinbase, a US cryptocurrency exchange, went public on April 14, 2021, and is traded on the NASDAQ stock exchange under the ticker COIN. The company is headquartered in San Francisco and was founded in 2012 by Brian Armstrong, the current CEO, and Fred Ehrsam.

Coinbase offers a platform for individuals to buy bitcoin on an exchange instead of mining it. It also acts as a broker for other cryptocurrencies, including bitcoin cash, ether, and litecoin. The company provides two types of accounts: regular and pro. The regular account charges higher commissions, while the pro account has lower commission fees.

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 trading various cryptocurrencies. The company offers over 25 cryptocurrencies, including some niche opportunities referred to as "altcoins".

If you are looking to invest in Coinbase stock, you can use a retail brokerage platform such as Fidelity, Robinhood, Etrade, or Charles Schwab. You can place a market order or a limit order. A market order instructs your brokerage to buy a quantity of shares at whatever price they are currently trading for, while a limit order allows you to specify a maximum price you are willing to pay per share.

Frequently asked questions