The NYSEs parent company Intercontinental Exchange Inc (ICE) is worth 66.40B. Today's IPO puts Coinbase at 100B+. The NYSE has been in operation since 1817. Coinbase has been in operation since 2012. The value of all crypto is < 1T. The value of the US stock market is 50T.
Trading fees in the crypto-world are getting more competitive as more established players support crypto. I don't see a defensible market position here, let alone established track record or strong potential for growth in future earnings.
No retail investor has accounts directly with the NYSE. Coinbase directly holds the customer relationship and if more government regulation comes down on crypto it will be a better moat for them against competitors.
I think Coinbase may still be overvalued but don't think it is directly comparable to NYSE or other major exchanges.
> I think Coinbase may still be overvalued but don't think it is directly comparable to NYSE or other major exchanges.
I would agree; Coinbase is competing against traditional brokerages and fintech (PayPal, Cash app), who can run their own nodes and key/wallet infra (as the network is the global exchange). Traditional brokerages can even identity proof their customers IRL with their branches and provide an appropriate level of customer service.
Alternatively, it would be somewhat humorous if Coinbase becomes the DTC and Cede & Co of digital assets (for brokerages who would rather pay and plug in vs build their own custody systems). What is old is new again.
«No retail investor has accounts directly with the NYSE»
That's a good point. So a fairer comparison would be to compare Coinbase to the market cap of NYSE ($66B) + a stock broker who has roughly the same userbase as Coinbase. For example Schwab ($127B) has about half as many accounts as Coinbase. So NYSE+Schwab = $193B. Suddenly Coinbase valued at $100B while having twice as many accounts and trading fees per dollar transacted ten-fold higher than NYSE+Schwab seems like a bargain... !
Why stop there? Let's add in Visa too. If we're gonna add Visa, let's add Mastercard. What about banks though? Maybe we add in JP Morgan?
If Coinbase has network effects, they're incredibly weak. I'll drop my Coinbase account tomorrow if I find a cheaper, safe place to buy coins. Schwab on the other hand has inarguably the best checking account out there, incredible customer service, and a great brokerage.
Coinbase is in a race to the bottom and they're gonna get smashed against the floor by established, defensible financial services. Grandma ain't making a Coinbase checking account. That's my thinking anyways.
This is a very simple understanding of economics that's ~100 years outdated. Most of the world's largest companies sell goods and services with relatively inelastic demand and/or significant barriers to market entry. What IP does Coinbase have that makes their service/good inelastic? Tomorrow when all coins are supported on Robinhood, Cash app, and Venmo, why use Coinbase? COIN investors haven't given me a good answer here. It just comes off delusional to me.
> They have 56 million verified user accounts.
This is a deceptive number. Coinbase has ~6M monthly active users at a time when crypto grew in value 10x. Average account duration is, I'm sure, very low. Schwab has ~30M active brokerage accounts. These are actual, comparable numbers. 56M is pretty much anyone that made an account with a linked email, no?
Agreed. As I've pointed out elsewhere, Coinbase trading fees are about 60x those of NYSE, Nasdaq, etc.; and Coinbase siphons off about 0.4% of the entire crypto market cap per annum.
It's not. But it doesn't have to be sustainable to justify the current valuation. Indeed if it were sustainable, Coinbase would be worth many many times what it is now.
Dotcom bubble was unique among other market crashes, because the main prediciton that fueled the dotcom bubble — that internet is the future and internet-based companies will be worth a lot of money — turned out to be completely right.
Compare it to the CME then, which is a commodities/futures/derivitives exchange, as Bitcoin is designated as a commodity by the US government. $74B market cap.
Comps are a fundamental part of establishing fair valuation. Comparing Coinbase to the NYSE doesn't seem arbitrary to me. How likely do you think it is Coinbase becomes a household name like Visa, really? How many retailers process payments per day with Coinbase? How long did it take Visa to build its network? How consistent is Coinbase usership?
I don't see Coinbase having a future in payment processing. Not unless cryptocurrencies become drastically more stable and energy efficient. Even then, you're hoping for the goodwill of the government not to implement serious restriction.
you should be able to understand that even the possibility of that becoming the new ICE has to be priced in, of course you are free not to do it though.
We just hope that the stupidity on the buy and sell sides more or less balances out, and what's left to determine the price is people with some real insight.
All that the valuation suggests is that Coinbase is a company with 1 bn in revenue last year, and 1.8 bn just last quarter. By virtue of upsides being unbounded while downsides are bounded by the money you invest, the downside case really doesn't matter with a good enough upside case. Coinbase going down in flames may be the most likely outcome. That doesn't matter as long as you're not YOLOing your entire portfolio into Coinbase. What matters is the average outcome. And the average outcome is pretty good despite Coinbase failing in 9 out of 10 scenarios.
I would point you to Matt Levine’s column today to maybe help you understand the type of thinking that drives the stock market. I would say you are guilty of looking in the rear view mirror and stating the obvious as opposed to looking to the future.
Bitcoin alone is worth over 1T, so your statement that all of crypto is worth less than 1T is a bit silly. The goal posts keep moving for crypto...next year it'll be that crypto is worth less than 5T, etc.
I looked at the NYSE daily volumes...unless I'm reading them wrong, they did $800m USD worth of trades today. Coinbase did $5b USD worth of trades today. So if you compare a company that's almost 200 years olds volume against a 9 year old company, and find that the startup is doing more than 5 times the volume of the incumbent (with zero lock in, since clients are free to trade cryptos on any exchange), then I'd say your comparison is actually a ringing endorsement for Coinbase.
You are reading them wrong. The NYSE traded 971 million shares of stock today worth $51 billion. That's just the NYSE, too. ARCA and ICE are owned by them as well.
FWIW, I think that total of $800m is purely stock trades and not the sum total of money moving through NYSE. According to wikipedia they were moving $130bn in 2013.
Trading fees in the crypto-world are getting more competitive as more established players support crypto. I don't see a defensible market position here, let alone established track record or strong potential for growth in future earnings.
This is all feeling very dotcom bubble 2.0.