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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. Coi
by rgifford 6y ago
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.
This is all feeling very dotcom bubble 2.0.
- dylkil 6y ago>This is all feeling very dotcom bubble 2.0. How many dotcom era companies had net income of $800mil in a single quarter?
- rgifford 6y agoI don't know exactly. Yahoo was one, adjusted for inflation. Man, almost forgot how it's spelled it's been so long.
- deleted 6y ago[deleted]
- notyourwork 6y agoDo you know the answer and are trying to prove your point? Or are you assuming none and asking a question you don't actually know.
- nzealand 6y agoCSCO, DELL, IBM, MSFT & ORCL (Adjusted for inflation). Only MSFT outperformed from dot com heights. Valuation matters.
- geoduck14 6y agoOh Cisco. It brings back memories. Not good memories, but it does bring back memories.
- ghego1 6y agoThe comparison with NYSE is indeed very convincing.
- majortennis 6y agoThe value of all crypto is above 2t https://coinmarketcap.com/ https://coinmarketcap.com/
- deleted 6y ago[deleted]
- FabHK 6y agoAgreed. 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. I don't see how that is sustainable at all.
- solveit 6y agoIt'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.
- FabHK 6y agoWhat P/E ratio do you calculate with? IIRC, a normal valuation (not predicated on growth) would value it at a quarter of what it is now.
- sdenott 6y agoNo 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.
- toomuchtodo 6y ago> 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.
- mrb 6y ago«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... !
- rgifford 6y agoWhy 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.
- briefcomment 6y agoThe value of all crypto is over 2T now
- kirbypineapple 6y agoBitcoin 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.
- knowaveragejoe 6y agoFWIW, 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. https://en.wikipedia.org/wiki/New_York_Stock_Exchange https://en.wikipedia.org/wiki/New_York_Stock_Exchange
- selectodude 6y agoYou 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. https://www.nasdaqtrader.com/trader.aspx?id=FullVolumeSummary# https://www.nasdaqtrader.com/trader.aspx?id=FullVolumeSummar...
- deleted 6y ago[deleted]
- weird-eye-issue 6y ago"I looked at the NYSE daily volumes...unless I'm reading them wrong, they did $800m USD worth of trades today" You are orders of magnitude off here. If you really think the stock market is that small you probably shouldn't be here commenting about it
- knowaveragejoe 6y agoThe value of all crypto is ~2.27Tn at the time of writing: https://www.coingecko.com/en/global_charts https://www.coingecko.com/en/global_charts Roughly 1Tn of that from 01/01/2021.
- austenallred 6y agoCoinbase is... not a stock exchange?
- toomuchtodo 6y agoCompare 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. https://www.cmegroup.com/ https://www.cmegroup.com/
- austenallred 6y agoCompare it to Visa. $475B market cap. I mean it’s not really like any of these things, the comparisons are totally arbitrary.
- rgifford 6y agoComps 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.
- austenallred 6y agoComps may be meaningful (usually mostly for market sizing and multiple) but these are all bad comps. Coinbase is just too unique.
- golergka 6y ago> This is all feeling very dotcom bubble 2.0. 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.
- janitor_monkey 6y agoThat's actually not so weird. Biggest bubbles are usually rooted in reality.
- pietrod 6y agoyou 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.
- jolux 6y agoPriced in, only if you're completely insane. Have you priced in the risk that the SEC shuts down the offramps before it gets there?
- solveit 6y agoObviously both of those possibilities are priced in. Investors aren't stupid, Gamestop notwithstanding.
- jolux 6y agoI think severe regulation is more likely than Coinbase becoming the next NYSE, but the valuation suggests investors think the opposite.
- ldbooth 6y agothe bet is whether US regulators have the panache to regulate a financial market anymore.
- solveit 6y agoAll 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.
- GlennS 6y ago
- futevolei 6y agoI 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.
- neximo64 6y agoICE is just one part of coinbase as they have integrated clearing, broking and an exchange If you add up all the brokers/investment banks, clearing companies that are related to ICE you get to a way larger number.
- deleted 6y ago[deleted]
- walrus01 6y ago> dotcom bubble where can I buy things with my beenz and flooz?
- u678u 6y agoProbably better to compare to other financials. PNC Bank has market cap of $76 billion. 50,000 employees, $16 bil revenue.
- andxor 6y ago> This is all feeling very dotcom bubble 2.0. Yeah, what a shame, that Internet thing never really took off.