According to a memo by investment firm Hayden Capital, the gigantic crypto exchange is in the best position to benefit from strong industry growth. By 2025, its revenue could reach $49.2 billion under a bullish outlook of rising interest among institutional investors, mass crypto adoption, and the sector reaching $6.8 trillion in value in total.
According to a more conservative crypto market cap estimate, Coinbase’s revenue would almost triple to $21.3 billion by 2025. Hayden predicts that Coinbase revenue will reach $8.8 billion in 2021, which is higher than other analysts’ estimates. FactSet predicts the exchange will generate about $7 billion in revenue this year.
According to Hayden Capital, Coinbase will sustain its market share lead over other crypto brokers while staying on top of competition from PayPal, Robinhood, and other fintech firms.
The memo states:
We believe Coinbase is in the best position to capture this growth. Trading at ~12.4x estimated 2021 EBITDA, we think the market is placing a discount on the business considering its explosive growth over past year (~12x year-on-year) and (considering) what we view as continued growth alongside the evolution of the crypto economy. This is also a highly cash generative business with 52% EBITDA margins off revenues of $2.2Bn in Q2’21 (we estimate ~$8.8Bn revenues for full-year 2021), and with a cash balance of ~$4.3Bn (as of Q2 2021).
Hayden is a value-oriented investment firm. It was founded by Fred Liu, a former New Street Research and J.P. Morgan small-cap equity fund research analyst. According to its website, their holdings are mostly concentrated in 6-15 core positions.
Coinbase acquires Agara for $50M
In related news, Coinbase acquired Agara, a customer service startup. According to a blog post, the deal is valued in the range of $40 million to $50 million. In the post, Coinbase said they expected to close the deal later this year. Agara’s main product is an AI-powered voice bot used for customer support.
Coinbase added it would use Agara’s tech to automate and improve customer service tools. The deal also adds AI expertise and deep learning to the exchange’s existing tech capacity and furthers its development of a tech hub in India, which it said it was aiming for in July.
Agara CEO and co-founder Abhimanyu told TechCrunch that his team, based mainly in India, would join Coinbase.
