Coinbase Looking for US$1.25 Billion Funds to Strengthen its Already Strong Balance Sheet

Coinbase, the largest cryptocurrency exchange in the United States, has recently created history by becoming the first-ever crypto exchange to get listed on NASDAQ. It took the direct listing route and Coinbase’s stock listed on NASDAQ is called COIN. After its debut on the leading US stock exchange in April 2021, the company’s market cap exceeded US$100 billion. Despite this, the company is again looking to raise another US$1.25 billion.

Coinbase announced that they are proposing a private offering of $ 1.25 billion convertible senior notes due 2026.” The announcement comes at a time when the price of each COIN stock went below the US$240 mark for the first time. In the first quarter of 2021, the Coinbase platform reported US$1.8 billion in revenue. The recent announcement of raising US$1.25 billion didn’t seem to reassure the market sentiment.

Reports say that Coinbase is raising fresh funds to strengthen its already strong balance sheet of the company and consequently for the institutional investors. As the US$1.25 crore fund is colossal and it came just one month after Coinbase directly listed the company on NASDAQ, questions are being raised about the purpose of the fund. The company hasn’t yet given a definite answer to that.

Reports say that Coinbase wants to strengthen the balance sheet and also minimize the dilution that the shareholders of Coinbase experience. Many have questioned the company’s recent announcement where it wanted to issue convertible notes to raise the intended funds. Everyone is asking the same question about Coinbase’s intention of taking the convertible bond route to invest in assets outside the company for the long term.

Coinbase said:

This capital increase represents an opportunity to bolster Coinbase's already strong balance sheet with low-cost capital that maintains the freedom to operate and minimizes dilution for Coinbase shareholders. Coinbase intends to use the net proceeds of the offering for general corporate purposes, which may include working capital and capital expenses, and to pay the cost of capped purchase transactions.”

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