Coinbase stock, listed on the Nasdaq 100 technology index, has lost 80% of its value since its listing was announced in April last year.
Coinbase entry into the stock market
On 14 April 2021, it debuted at a price of $381, while yesterday it closed below $58.
In truth, after 14 April it has never been able to return to its opening levels, so much so that its all-time high is still $429 recorded a few hours after trading began.
At the time, it was already clear that the IPO was for no other purpose than to allow shareholders to monetize their shares, just as the crypto markets were making new all-time highs.
On 14 April, Bitcoin’s price had reached $64,000 for the first time in its history, while today it hovers around $27,000, or less than half that.
Paradoxically, Coinbase’s share price has fallen by a much larger percentage since then.
In early November, when Bitcoin’s price set a new all-time high at nearly $70,000, Coinbase’s share price had only managed to climb back up to $369, which is still below the opening day price.
In six months it has lost 85%, while Bitcoin has lost 60%.
Coinbase CEO Brian Armstrong commented on Twitter with a quote from Fred Wilson that markets are irrational in the short term, but not in the long term, and sometimes offer sell-off prices for the world’s largest companies.
"Markets are irrational in the short term but not over the long term. They sometimes offer fire sale prices on the greatest companies in the world." – @fredwilson
— Brian Armstrong – barmstrong.eth (@brian_armstrong) May 11, 2022
A comparison of Coinbase’s corporate structure with that of the largest companies
To be fair, Coinbase is not among the largest companies in the world, as it capitalizes $11 billion right now, and has a turnover of about $8 billion. For example, Apple capitalizes 2.3 trillion and bills 365 billion, so Coinbase is about two orders of magnitude smaller.
In addition, the company is currently reporting lower-than-expected profits, and the release of data regarding its financial performance for the first quarter of 2022 has thrown shareholders into a bit of a panic.
It is enough to mention that only yesterday it lost 26% on the stock market.
The company’s management is exhibiting an apparent calm, which actually clashes with the panic that seems to prevail in the markets. CFO, Alesia Haas, claims that the company has chosen at this stage to prioritize investment over profitability, because the company’s strategy would actually be long-term, focused on building a future cryptocurrency-centric economy.
It is worth noting that Coinbase still holds large cash reserves, thanks in part to large profits generated in four of the five quarters it has been a public company so far.
The panic of investors and speculators in the stock market would indeed seem to be unwarranted at this time, because it may well just be a moment of distress due in turn to a moment of distress in the crypto markets. But the general sentiment of strong pessimism seems to continue to clearly outweigh rationality.