At long last, Coinbase’s NFT push went live this week.
The U.S. cryptocurrency trading giant’s entry into the non-fungible token market has been a long time coming and comes at an important time for the public company. Coinbase shares are trading near all-time lows today before gains land in early May.
Coinbase has proven it can build one big, profitable business by helping both individuals and institutions to buy, sell and deploy crypto. But with its earnings — and therefore its net income — oscillating with the macro health of the crypto market itself, the company has taken on the valuation profile of a bank rather than a tech company.
Indeed, if we observe the company’s Fourth quarter net income of $2.49 billionand we compare an annualized version of that number to Coinbase’s current market valuation of $36.3 billion. We can see that the company is trading at a sales multiple of less than four times.
So Coinbase’s NFT efforts are simultaneously an entry into a market that already has an established player – the valuable and popular OpenSea NFT platform – and a shot at a new vein of growth to be tapped. Growth that could help Coinbase bring its valuation and resulting multiples closer to the range it enjoyed privately.
Unfortunately, the data for the Coinbase NFT push is de minimis today. That’s really no big surprise, as the former unicorn’s new service is, well, new. Instead of trying to analyze what appear to be initial numbers from third-party analytics services, let’s ask a few questions. Today we outline our top three head scratchers regarding the new Coinbase NFT project.
Basically, we want to know how quickly Coinbase’s NFT marketplace can scale in the short term, its potential economic profile, and finally its long-term growth prospects. We’ll take them one by one. Let’s have some fun!
How fast can Coinbase scale NFT volume?
Over the next few weeks, we’ll be curious to see how much volume there is in terms of total trades, as well as the value of those trades, powered by Coinbase’s NFT marketplace.
The company has a massive waiting list and a simply massive user base to jump into its new product. How well that waitlist converts to active users and then activity is a crucial question. And after the waitlist is chewed through, Coinbase’s share moving to the NFT product will help us determine the company’s volume growth in the immediate future.
So far Data is limited, and, frankly, incomplete. So we don’t know much today, but the strength of Coinbase’s start in the NFT game may give us an idea of how quickly volume could grow over the next few quarters, a key period for the company if it looks to regain some of the value , which it has lost in recent months. Of course, however, volume is only part of the trading revenue equation. The other is fees.
How strong does the economics of Coinbase’s NFT push look?
Long-term? Good. In the near future? Strange!
Here’s an excerpt of our coverage of the Coinbase NFT launch earlier in the week:
There will also be no transaction fees for NFTs on its marketplace “for a limited time”. Over time, the fee will increase but will be a “low single-digit fee,” Coinbase vice president of product Sanchan Saxena said during the meeting. Users can use either a Coinbase wallet or any self-custody wallet they own to trade NFTs on the platform.
By charging no startup fees, Coinbase shows that it is incredibly wealthy and profitable. It can afford to forego fees to encourage volume. Once his marketplace has reached a healthy supply and demand level, he can start earning revenue.
3 questions about Coinbase’s NFT push – TechCrunch Source link 3 questions about Coinbase’s NFT push – TechCrunch