GM DOers!
Coinbase recently released their 2023 yearly report and it absolutely smashed all of Wall Street’s expectations.
Revenue for Q4 2023 hit $953.8 million, beating the estimate of $826.1 million.
1,060
On this news, Coinbase hit a new yearly high, currently sitting at $180 (just before market open).
Back in May 2023, when $COIN was <$60, we mentioned that Coinbase was ready to rip, and it didn’t disappoint.
The stock has performed well and so has the company. Coinbase is becoming an absolute darling on Wall Street, yet they still don’t understand this company (or the industry).
That’s why $COIN continues to be such a great opportunity!
Here's the full yearly breakdown of Coinbase’s earnings – it looks incredible.
If some of these numbers on this infographic don’t make much sense to you right now, don’t worry, I’ll simplify & highlight the key things below.
TL;DR: Coinbase is slowly but surely creating immense FOMO among Wall Street investors & nobody is bullish enough on $COIN.
Not to mention, understanding Coinbase and its numbers is a great way to understand the health of the industry, as well as where we are in the current crypto cycle…
So take note & let’s dive into the details. ⏬
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🤩 Coinbase’s Incredible 2023 Stats
Coinbase’s revenues for 2023 ($3.1 billion) were similar to 2022 ($3.2 billion).
However, in 2023, Coinbase managed to come out with a $95 million profit versus the $2.6 billion loss in 2022.
Their EBITDA – which shows a company's earnings before certain costs like interest and taxes are subtracted – jumped from a $371 million loss in 2022 to nearly $1 billion in profit in 2023.
The main contributor? Subscription and service revenue soared by 78% to $1.4 billion 🚀 – this revenue came from custodial fees, staking, analytics, and interest from crypto holdings.
At the same time, Coinbase managed to reduce its operating expenses by 45%, the main driver being decreasing their staff count by 25% to 3,416.
Another huge factor contributing to Coinbase’s revenue was $USDC, which generated 22% of their total revenue for 2023.
Context: $USDC makes money through interest from its reserves and transaction fees on platforms and exchanges. Since 2023 had high interest rates, it turned out to be a great year for $USDC issuers (Coinbase & Circle).
🔑 Other Key Achievements: Base, Staked $ETH, Bitcoin ETFs & Derivatives…
In 2023, Coinbase launched Base, their L2 network on Ethereum aimed at reducing fees and speeding up transactions, making blockchain more accessible for users and developers.
This is the bedrock of our actions and aspirations as we work to bring the world onchain
We’re building a new internet, and a new economy
Their incredible launch with Onchain Summer led to ~$600 million being locked on Base today.
Speaking of onchain stuff, Coinbase stakes about 4.4 million $ETH on behalf of their customers, equating to 14% of all staked ETH.
However, since Coinbase has changed its staking process multiple times in the past, there might be more untagged ETH hidden from the public
Staking 4.4 million $ETH earns a total of about $615 million a year at today’s 5% staking APY. From that, Coinbase takes a 25% cut, making around $154 million a year from, based on today's $ETH prices.
That’s just insane… And it’s not all!
Coinbase’s massive achievement lately is that it became the custodian for 8 out of the 11 Bitcoin ETF providers.
This shows that Coinbase is probably the most reliable custodian around, capable of safely holding billions of dollars worth of $BTC for their institutional customers.
Because of that, more and more institutions are trusting Coinbase, and that’s reflected in Coinbase’s volume:
Lastly, Coinbase has also launched their long awaited international derivatives exchange, where people can trade crypto with leverage.
I think that this could be massive, because 75% of the yearly volume in crypto comes from derivatives trading, not spot trading (where you actually hold your coins).
By capturing even a small percentage of this market, Coinbase could literally double their revenues by 2025, which we wrote about earlier this year.
However, the most underrated highlight from Coinbase’s report is their Coinbase Ventures holdings.
🤔 How Many Assets Does Coinbase Ventures Actually Own?
Coinbase Ventures is the investment arm of Coinbase, focusing on investing in early-stage crypto companies.
Some notable investments over the years include Celestia, Arbitrum and dYdX.
In their report, Coinbase stated that their investment portfolio was $1 billion.
However, in previous earnings calls, Coinbase noted its assets are listed at cost price, not current value, on their balance sheet.
Thus, the reported $1 billion shows how much Coinbase Ventures’ assets are worth at original cost.
Their real portfolio value could far exceed reported figures, potentially even 100X, since the tokens they invested in have gone up a lot in value. 🚀
This indicates a large amount of unrealized profit not yet reflected in Coinbase's financials, and that’s a huge opportunity.
Source? Michael Ippolito, Blockworks Co-Founder. 👇
The entire CB ventures portfolio, which includes the like of Celestia, Arbitrum, DYDX, etc... is held on balance sheet at cost (!).
Wild. That's got to be worth 50X the current marks, maybe 100X.
💪 Coinbase – The Most Important Crypto Company
Coinbase's earnings significantly surpassed Wall Street's forecasts. Most analysts, including JP Morgan have been terribly wrong in their predictions, and have already updated their price targets for $COIN. 😂
Everyone's much more bullish after Coinbase's annual report, and savvy investors should be awakened & crypto FOMO will most likely start to creep in.
Here’s what Wall Street sees every day:
Bitcoin ETFs are the most popular products of all
The 10 bitcoin ETFs netted +$2.3b last week. For context, that is more than any other ETF (out of 3,400) took in. $IBIT alone was #2. This brings total net to +$5b, which is more than BlackRock as a whole has taken in. Again, this is all net GBTC bleed. Throw that out and the…
[1/4] Bitcoin ETF Flow - 16th Feb 2024
All data in. Another strong day with +$331.7m net flow. For the week its +$2,273.4m net flow
Total net flow since 11th Jan is +$4,926.9m
Bitcoin ETF flows >>> Gold ETF flows
Bitcoin ETF flows YTD: $4.1 billion
Gold ETF flows YTD: -$2.4 billion
This is the real flippening.Coinbase beating all estimates
This should shake the smart money out of their hibernation.
It is going to be a fun year.
The best part? This is just the beginning.
$COIN is still not at ATHs
Ethereum ETFs are coming
Circle is planning to go public soon
This is going to be a fun year for crypto and with Coinbase playing a role in crypto (similar to Apple's role in personal computing and the internet) I think that $COIN will turn out to be a great investment.
I’ve got a full PRO report that highlights exactly why that is. Give it a read & stop fading $COIN!!
Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha! ❤️
How'd you feel about our read today?
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Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.
Collect this post as an NFT.