Updated: March 12, 2024, 6:56 PM EDT
Seizing the opportunity to raise debt as the cryptocurrency’s rally pushed its stock price near 26-month highs, Coinbase announced plans Tuesday to sell $1 billion of debt to institutional investors.
The largest U.S. cryptocurrency exchange by daily trading volume is offering convertible senior notes to institutional investors. The move aims to free up funds to repay existing debt and cover corporate costs. The sale of bonds maturing in 2030 could increase the company’s debt by up to $1 billion, bringing its debt to $4 billion.
At maturity, the notes can be converted into Coinbase’s Class A shares, cash, or a mix of both forms of redemption. Investors can purchase an additional $150 million worth of bonds within the first 30 days of sale.
Coinbase shares rose 0.78% during normal trading hours before falling roughly 2% in the after-hours session following the announcement, according to data from Yahoo Finance.
Nonetheless, the exchange’s shares have risen more than 40% in the past year amid a significant rise in cryptocurrency prices following federal regulators’ approval of bitcoin-based investment products. According to the company’s financial statements, Coinbase’s current market capitalization is $61.58 billion, and its cash reserves as of the end of last year amounted to $5.4 billion.
However, the exchange is still recovering from the market crash that sent cryptocurrency prices plummeting following the FTX collapse in November 2022 and the company’s ongoing legal battle with regulators in federal court. Coinbase’s revenue last year was $3.1 billion, down from the roughly $7.8 billion it earned during the previous cryptocurrency bull market in 2021.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.
About the author
Elizabeth Napolitano is a data reporter covering business and technology news with a focus on cryptocurrency. Before she joined The Block, Elizabeth reported on BigTech, AI, cryptocurrency, and video games for CBS Moneywatch. As a CoinDesk reporter, she covered DeFi, NFTs, and US courts. She received a master’s degree in journalism from CUNY. X: Follow her at @LizKNapolitano.