Coinbase Global (COIN -8.90%), one of the world's largest cryptocurrency exchanges, went public through a direct listing on April 21, 2021, with a reference price of $250 per share. No shares were actually sold at that price, and its stock started trading at $381. For $10,000, you could have bought 26 shares of Coinbase on that very first trade.
Coinbase's stock surged to $429.54 later that day, which would have temporarily boosted the value of your investment to nearly $11,300. Unfortunately, that also turned out to be Coinbase's all-time high.
As of this writing, Coinbase's stock trades at about $45 -- so your $10,000 investment would be worth less than $1,200 today. Let's see why Coinbase initially attracted a stampede of bulls before getting devoured by the bears.
On the day Coinbase went public, a single Bitcoin was worth nearly $52,000. Ethereum traded at about $2,400, and the market was flooded with smaller altcoins. Today, Bitcoin is worth less than $16,000, Ethereum is worth about $1,100, and many of those smaller tokens simply disappeared.
The cryptocurrency market crashed for three simple reasons: Rising interest rates drove investors away from riskier investments, regulators turned up the heat on cryptocurrencies across many countries, and the failures of several high-profile tokens and exchanges drove away potential investors.
Coinbase's initial growth rates were jaw-dropping. In 2021, its trading volume surged 766% to $1.67 trillion, its number of monthly transacting users (MTUs) increased 307% to 11.4 million, and the total assets on its platform jumped 209% to $278 billion. Its full-year revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) skyrocketed 545% and 676%, respectively.
But in the first nine months of 2022, its trading volume declined 39% year over year to $685 billion, its revenue dropped 48%, and its adjusted EBITDA turned negative -- even after it laid off nearly a fifth of its workforce earlier this year. Its MTUs shrank sequentially to 8.5 million at the end of the third quarter, while its total platform assets fell 60% to $101 billion.
Back in June, CEO Brian Armstrong told Coinbase's employees and investors to brace for a "crypto winter" that could last for an "extended period" of time. Unfortunately, recent estimates suggest that a "crypto ice age" could still be possible: Analysts expect its revenue to decline 59% to $3.18 billion this year with a negative adjusted EBITDA of $429 million.