UPDATED: March 12, 2024, 6:56 p.m. EDT
Seizing the opportunity to take on debt as its stock price is near a 26-month high following a crypto rally, Coinbase announced plans on Tuesday to sell $1 billion in debt to institutional investors.
The largest US-based crypto exchange by daily trading volume offers institutional investors convertible senior notes. The move aims to consolidate the funds needed to repay its existing debts and cover its business costs. The sale of the notes, which would mature in 2030, could add as much as $1 billion to the company’s liabilities, bringing its debt to $4 billion.
At maturity, the notes are convertible into Class A shares of Coinbase, cash, or a mixture of the two forms of redemption. Investors may be able to purchase an additional $150 million worth of notes within the first 30 days of the sale.
Shares of Coinbase fell about 2% in the after-hours session following the announcement, after gaining 0.78% during regular trading hours, according to data from Yahoo Finance.
Nonetheless, shares of the exchange remain up more than 40% over the past year, amid a surge in cryptocurrency prices precipitated by federal regulators’ approval of a series of cryptocurrency offerings. investment based on bitcoin. Coinbase currently has a market capitalization of $61.58 billion and had $5.4 billion in liquidity at the end of last year, according to the company’s financial statements.
However, the stock market is still recovering from a market implosion that sent cryptocurrency prices tumbling following FTX’s collapse in November 2022, in addition to the company’s ongoing legal battle with regulators in federal court. Last year, Coinbase had $3.1 billion in revenue, down from the roughly $7.8 billion raked in during the previous cryptocurrency bull run in 2021.
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About the Author
Elizabeth Napolitano is a data journalist covering business and technology news, with a focus on cryptocurrencies. Before joining The Block, Elizabeth reported on BigTech, AI, crypto and gaming for CBS Moneywatch. As a CoinDesk reporter, she covered DeFi, NFTs, and the US courts. She holds a master’s degree in journalism from CUNY. Follow her on X: @LizKNapolitano