UPDATED: March 12, 2024, 6:56PM EDT
Seizing on a chance to get debt while its stock price is near its 26-month high in the wake of a crypto rally, Coinbase announced plans Tuesday to sell $1 billion in debt to institutional investors.
The largest U.S.-based crypto exchange by daily trading volumes is offering institutional investors convertible senior notes. This move aims to shore up funds to repay its existing debts and cover its corporate costs. The sale of the notes, which would mature in 2030, could add up to $1 billion to the company’s liabilities, bringing its debt to $4 billion.
Upon maturation, the notes are convertible to Coinbase’s Class A stock, cash, or a mix of the two forms of redemption. Investors might be able to buy an additional $150 million worth of notes within the first 30 days of the sale.
Coinbase shares traded roughly 2% lower in the after-hours session following the announcement, after having gained 0.78% during normal trading hours, Yahoo Finance data shows.
Nonetheless, the exchange’s stock remains up more than 40% in the past year amid a strong rally in crypto prices precipitated by federal regulators’ approval of a swath of bitcoin-based investment offerings. Coinbase currently has a market capitalization of $61.58 billion and had $5.4 billion cash on hand as of the end of last year, the company’s financial statements show.
However, the exchange is still recuperating from a market implosion that kneecapped crypto prices after the collapse of FTX 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 it raked in during the previous crypto bull run in 2021.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
