CoinBase, one of the most popular brokers for cryptocurrencies, had an initial public offering (IPO) on April 14th, 2020, with an open listing price of $381. I will explain what CoinBase does, how their initial public offering went along with their older listings and offerings, and what makes the company different from other crypto brokers, like RobinHood, Gemini, and Kraken.
With over 56 million registered users in 2021 compared to 43 million in 2020, CoinBase is a leading brokerage for investing and trading in solely cryptocurrencies such as Bitcoin, Dogecoin, Etherium, and 47 other currencies. Just to describe the scale involved, CoinBase processes a trading volume of about $335 billion dollars every quarter, or a rough average of $1.3 trillion dollars a year.
CoinBase’s transaction fees are one source of revenue for them. Whenever an investor would like to place a trade, he or she must pay a certain transaction amount or fee to their brokerage in order to do so. Though there are several brokers that charge a minimal transaction fee or no fee at all, CoinBase's easy-to- use platform and strategic ads attract investors to their software.
On average, their fees range from 0.5 - 4.5% of the value of the trade. There are several factors that affect the fee, such as which country you are living in, or what type of transaction you make. A transaction fee does not necessarily pertain to the fee that is paid when one buys or sells a certain crypto or security; It could involve the payout, which can be 1.49% if the payout is sent to a bank account and 3.99% if sent to a debit card or PayPal.
Another opportunity for professional traders to use the brokerage is CoinBase Pro. This different version of the brokerage system offers several more functions than a regular CoinBase account would including the ability to see order history, monitor open orders, manage multiple portfolios at once, and view detailed charting software with many indicators.
The main difference between CoinBase and CoinBase Pro is that CoinBase is aimed at beginners that are just getting their feet wet with crypto, while the Pro version is aimed at professional, full time traders, who use sophisticated analytical methods and strategies to trade. Also, the fees paid are significantly lower, with a trading fee of 0 - 0.5% depending on the size of the order.
If retail investors were to buy CoinBase at its open price, $381, their current investment would be down 18% on the first day of trading, and nearly 22% if they didn’t sell their shares as of April 30th, 2021. Some investors, however, saw a 6,567-800,000% return on their investment. This is due to CoinBase’s funding round in May 2013, where the company tried to raise money. In total, the investors raised $5 million and were given a certain number of shares at $0.20. This investment caused their positions to increase 800,000% at the CoinBase IPO price of $381. Investors such as Garry Tan saw his $300,000 investment in 2013 yield a whopping $2.4 billion. Similarly, CoinBase had a series D round for funding in 2017, where the company was valued at $1.5 billion. Those who invested in March of 2017 have seen their investment skyrocket by 6567% with the CoinBase IPO price of $381.
Currently, the stock price has come down to $297 and a market cap (i.e. the total values of all its shares) of $62 billion as of April 30th, 2021. This fluctuation in price results from the volatility associated with the recent initial public offering, as the stock has seen highs off $429.54, lows of $282.07, and hit a market cap of $100 billion on its first day of listing. This was the biggest ever direct listing with its market cap debuting at $63.5B, and CoinBase continues to grow along with popular cryptos like Bitcoin and Etherium.