Image Credits: Chesnot / Getty Images
The NFT push came to the market this week.
It has been a long time coming and it is an important time for the public company. Ahead of its earnings that will land in early May, shares of Coinbase are trading near all-time lows.
It has proven that it can build a large profitable business by helping both individuals and institutions buy, sell, and stakecryptocurrencies. The company has taken on a valuation profile of a bank more than a technology company because of its revenues and net income that are related to the health of the market.
Top NFT collections are bringing in millions of dollars weekly, but which will survive?
If we look at the company's Q4 net revenues of $2.49 billion, we can see that the company is trading for a revenue multiple of more than 30.
The Open Sea NFT platform is valuable and popular, as well as the entry into the market that already has an incumbent. The multiples could be closer to the range that it enjoyed while private.
Today is de minimis for data on the NFT push. The new service from the former unicorn is new and not a huge surprise. Let's ask a few questions instead of trying to figure out what the numbers are from third-party services. We are detailing our three top head-scratchers about the new project.
We want to know how fast the NFT marketplace can scale in the near term, its potential economic profile, and its long-term growth prospects. We will take them in order. Let's have fun!
Over the next few weeks, we will be curious to see how much volume there is in terms of total trades, as well as the value of those trades driven by the NFT marketplace.
The company has a huge user base that can be shuttled into its new product. The question is how well the waitlist converts into active users. The NFT product will help us determine volume growth in the immediate future, as the fraction of Coinbase that heads over to the product will help us.
Data is limited and incomplete so far. We don't know much today, but the strength of the start of the NFT game will give us a good idea of how quickly it will scale volume over the next few quarters, a key period for the company if it wants to regain some. Volume is just one part of the equation. Fees are the other one.
In the long term? Good. Is it in the near term? Weird!
This is an excerpt from our coverage of the launch of the NFT.
There will also be no transaction fees on NFTs on its marketplace “for a limited time.” Over time, the fee will increase, but will be a “low single-digit fee,” Sanchan Saxena, vice president of product at Coinbase, said during the meeting. Users can either use a Coinbase wallet or any self-custody wallet they own to trade NFTs on the platform.
The fact that it is wealthy and profitable is being demonstrated by the fact that it is free to start. Fees can be forgone to encourage volume. It can begin to make money once it reaches a healthy level of supply and demand.
All Rights Reserved © 2024
