The largest U.S. cryptocurrency exchange Coinbase could be valued at $28.2 billion after its IPO. Messari analysts cited this figure.
Following Coinbase’s IPO announcement, we value the company at $28 billion. Coinbase is one of the most prominent exchanges with $1 billion daily volume in Dec-20.
Check out our model and edit it to your own assumptions. https://t.co/BQeSAxUd5j— Mira Christanto (@asiahodl) December 18, 2020
On December 17, Coinbase filed with the U.S. Securities and Exchange Commission (SEC) an S-1 registration statement for an initial public offering. The timing and price parameters of the IPO were unknown at the time of writing.
Messari analysts built their estimate on publicly available information.
The inputs for the calculations were formed from:
- data from previous funding rounds;
- the funds of 35 million clients totaling $25 billion;
- the company’s daily addition of 13,000 retail investors, based on data disclosed to the UK regulator for Coinbase UK;
- the average daily trading volume per client was estimated by Messari at about $6,000.
In the Coinbase financial model, researchers did not include data from the card business, except for the revenue from issuing a payment card. A negligible share of less than 1% of the total came from the exchange’s venture activities, listing fees, which can reach $100,000 for ERC-20 tokens and $150,000 for others, as well as staking services.
To obtain the valuation, researchers used the average P/S multiples of public companies in analogous businesses. For the trading business, it was 12.7x based on data from the Moscow Exchange, exchanges of Hong Kong, Singapore, Japan, as well as ICE and Euronext. For the custody business, the multiplier was 2x, using as a reference one of the largest traditional financial market players, Bank of New York Mellon.
Data: Messari.
As an alternative to the first approach (by business line), Messari considered the current valuation of listing cryptocurrency exchanges BC Technology and Diginex on the Hong Kong and NASDAQ exchanges respectively. In the second case, the P/S multiple was 247x and was excluded from calculations as a [simple_tooltip content=’In statistics, an outlier—the result of a measurement that stands out from the overall sample.’]statistical outlier[/simple_tooltip]. For a more conservative estimate, the researchers used the average for 2018–2020, which was 19.9x (shares are now trading at around 30x).
BC Technology is known as the operator of OSL, a regulated institutional platform for digital assets in Hong Kong and Singapore, in which Fidelity International is a shareholder.
OSL — a crypto exchange geared toward institutional players, also offering brokerage, custody and SaaS-services. The company holds licenses to operate with digital assets from the Hong Kong Securities and Futures Commission.
Assigning 30% weight to the first method (by business line) and 70% to the second (as a holding company), Messari analysts arrived at a Coinbase valuation of $28.2 billion.
Data: Messari.
Based on the performance of BC Technology’s shares and the market reaction to MicroStrategy’s decision to invest reserves in Bitcoin, as well as the premium of Grayscale Investments’ products over net asset value underlying them, analysts suggest the IPO could exceed $32 billion.
Messari believes the Coinbase listing will serve as a benchmark for other players in the crypto industry.
Crypto and equity markets valuations have traded independently. This listing is important even for Token valuations as Coinbase will provide a valuation anchor — not only for future equity listings — but also for crypto-native exchange tokens. https://t.co/BQeSAxUd5j
— Mira Christanto (@asiahodl) December 18, 2020
BlockFi, the cryptocurrency lending firm, is also reportedly considering an IPO.
Earlier, Messari valued the group of Barry Silbert’s Digital Currency Group (DCG), which could also become public.
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