The public company’s entry into the market for non-fungible tokens has been a long time coming. Coinbase’s stock is nearing an all-time low today, ahead of its earnings report in early May.
Coinbase has proved that it can assist consumers and institutions purchase, trade, and stake crypto. But because its revenues — and thus net profits — are linked to the overall health of the crypto market, it is more like a bank than a technological company.
Indeed, comparing Q4 net revenues of $2.49 billion to Coinbase’s current market price of $36.3 billion shows a revenue multiple of less than 4x.
Coinbase’s NFT endeavour is both a foray into a market with an incumbent — the valued and popular OpenSea NFT platform — and a shot at new growth. Growth that might bring Coinbase’s price and multiples closer to those enjoyed when private.
Sadly, today’s data on Coinbase’s NFT campaign is scant. This is not surprising given the novelty of the former unicorn’s new offering. Instead than trying to decipher the early figures from third-party analytics services, let’s ask some questions. Here are our top three questions about the new Coinbase NFT initiative.
So, we want to know how quickly Coinbase’s NFT marketplace can scale, its potential economic profile, and its long-term growth potential. We’ll go in order. Let’s have fun!
Why isn’t Coinbase able to scale NFT
We’ll be watching the total volume of trades and the value of those trades in the coming weeks.
The company has a huge queue and a huge user base to convert to its new product. The question is how successfully that waitlist turns into active users and subsequently action. After the waitlist is gone, the percentage of Coinbase that goes to the NFT product will help us forecast future volume growth.
So far, data is scarce and incomplete. So while we don’t know much today, the strength of Coinbase’s start in the NFT game may indicate how quickly it will increase volume in the next quarters, a crucial time for the business to recapture some of the value it has lost in recent months. Volume is, of course, only one component of trading revenue. It’s a fee thing.
