Coinbase is Surging Despite 2018 Crypto Crash but Will the Crypto Company’s Revenue See $1.3 Billion Goal
While speculators and crypto investors alike are all too aware the market has been in a bearish downturn, with the total market cap receding from $200 billion months ago to just above $100 billion, this is a stark contrast to Coinbase.
What can almost be described as a 6 year old start up, the crypto coin exchange, while having experienced the bearish trend in its own right, is continuing to perform better than its counterparts.
Because unlike other coin exchanges, coinbase is expanding into new horizons such as venture funds, among other areas, and it shows no sign of stopping. As of late 2018, it has managed to obtain the rather impressive market valuation of around $8 billion.
Now while this is an impressive figure to cut in the market, is this amount closer to fiction or reality? What’s more, will it be able to meet the anticipated $1.3 billion dollars in revenue that it’s forecasted to meet.
Well, if 2017 is anything to go by, we may certainly find ourselves presently surprised. This is because Coinbase has managed to generate over $923 million in revenue, and of that $380 million of it was in profit. So it’s no surprise then that in 2018, we expect to see this increase by $400 million and a further $70 million in profit. If coinbase’s previous performance isn’t enough to go by, a recent report published by Bloomberg makes for compelling enough evidence.
In August of this year, the California based coin exchange was alleged to have been experiencing over 50,000 new sign ups per day. Now while this paints a very optimistic picture, it can’t detract from the reality- the bearish market has been going on for the last several months, which leaves us with one simple question: Can Coinbase’s 4th quarter financial report buck this broader trend?
One of the answers lies in where Coinbase makes its money. Like any coin exchange, it generates its revenues through percentages of each transaction made which is currently 5% of each transaction. It also manages to obtain a revenue through commissions on trades made on its professional platform. And here’s where things get interesting; trading in 2017 was far higher than 2018 which is currently declining.
While August saw an influx of new users, we are starting to see this number decline across quarter 3 (this is according to data from the consulting group Diar). And while the amount of user has decreased, the volume of trading of bitcoin in terms of volume have increased compared to 2017 by $600 million. Meanwhile, Ethereum has been slashed falling from $5.2 billion in 2-17 to $2.8 billion in 2018. The same condition are true of Litecoin, which slid down by £1.6 billion compared to last year.
The only one that’s remained relatively statistic was BCH, which has been trading sideways at $875 million.
Does This Mean Coinbase Will Hit Its 2018 Target?
While uncertainty is abound for the California based coin exchange, according to sources, there’s plenty of new blood to give it more than a fighting chance. Some of the inbound newcomers include Chris Dodds, a new member of the company’s board of directors.
Alongside Dodds are fellow new hires serving alongside him on the board, these include Charles Schwab and Jonathon Kellner (the latter of whom will be serving as a managing director of the institutional group of coinbase). So with this new transfusion of expertise, can the company make it pay off?
Rumors are abound of its potential. From January to August, Coinbase had been involved in the acquisition of Distributed Systems which is a Californian based start-up specializing in digital identity. While this says a lot about Coinbase’s attention to personal security, the fact that it was sold for an undisclosed amount of money leaves many questioning whether or not it was money well spent.
Coinbase’s Eyes on Acquisition
Alongside Distributed Systems, Coinbase is currently in talks with the investment company Tiger Global. The coin exchange’s goal being to obtain an asset worth over $500 million. This is according to a report by recode.
The exchange has also denied several rumors that it intends to launch an Initial Price Offering in the near future.
In order to improve useability, Coinbase has announce that customers in the United States can now use PayPal to conduct withdrawals. Doing so will allow customers to avoid outstanding withdraw fees through the use of a third party.
Does Coinbase show any sign of slowing down? Not according to the company CEO Brian Armstrong, who writes longingly about the company’s expansion plans and continuous updates for the crypto community.
One of his recent posts includes,
“Our business is cyclical, and it’s crucial that we continue pushing hard to ship new features, fix what’s not working, and make the customer experience better, whether the crypto market is on fire or in a slower part of the cycle. We did that well this quarter and in quarter 4, we’ll need to double down – and stay humbler, scrappy, and focused- to do even more.”