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…
