Within a week of its IPO, Bitcoin and crypto exchange Coinbase has generated great hype. Its earnings report for Q1 2021 could have an impact that will be felt throughout the crypto market.
Coinbase Will go public on April 14th, after some controversy. The exchange’s estimated valuation sits at $100 billion and will resale up to 114 million Class A common shares under the ticker COIN.
Per their report, the exchange has generated $1,8B in revenue during their first quarter of 2021. In addition, it registers a $730 to $800 million in net income (up 312%), a traded volume of $335 billion (up 272%), and $223 billion in assets on the platform.
One key data is their number of active users which present growth of over $10 million in comparison with 2020 standing at 56 million. This is bigger than Venmo, Cash App, eToro, and Robinhood, as reported by analyst John Street Capital.
In contrast, with over 15 years of operations, PayPal has around 360 million active users. The analyst believes COIN could generate even more revenue than some of the most prestigious institutional trading platforms like the Chicago Mercantile Exchange, Nasdaq, amongst others. He added:
Incumbents can no longer ignore this. The BoD’s of $SCHW $IBKR $MS (as a result of the $ETFC acquisition) and Fidelity (even though they are private) have to add crypto trading at this point it’s almost a violation of their fiduciary duty to s/h not to.
Coinbase Q1 earnings effect on Bitcoin
Investment banker Ellie Frost has explained how the report’s effect may have been “underestimated”. Frost believes that once brokerages get a hold of Coinbase earnings, the exchange will “crush” their expectations.
This will be another reason why institutions won’t be able to continue ignoring the crypto market, as John Capital also claimed. It could also be a tool to benefit the entire market, in order to remove “prejudices” against the industry. Frost said:
Traditional finance can no longer put their fingers in their ears and yell that “Bitcoin isn’t real” when you have a public company pulling in ~$2B in revenue every quarter.
Predicting a sustained increase for Coinbase over the next quarter, Frost believes that institutions will rush to take a stake on Coinbase and the cryptomarket. As a result, fresh capital will drive BTC’s price. Frost added:
Then they’re going to do the same thing again in Q2 and Q3 and Q4. Even if you’re not a fan of Coinbase, their quarterly earnings will be huge in flipping the mindset of traditional finance and investors, causing major waves for Bitcoin.
The report has received the praise of many in the crypto market. FTX exchange CEO Sam Bankman-Fried claimed the financial stamen is “impressive” and called it a “huge step for the industry. He added:
(…) kudos to Coinbase for waiting to go public until they were consistently profitable and at least somewhat projectable. That’s better than many listings. And it’s a great precedent for crypto.
BTC is trading at $58,245 with small losses in the 24-hour chart. On the weekly chart, BTC still has some gains with a positive 1.1%.