Coinbase Tried To Place $8 Billion Value on Itself

April 28, 2018
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Coinbase placed $8 billion value on itself when it recently made an offer that involved its shares. But that value is far higher than the last valuation the company did. The company offered its stock at that huge amount when pitching an equity package to the investors of Earn.com, according to individuals that know about the negotiation, Coinbase purchased Earn for more than $100 million earlier this month.

It is not totally clear if the management of Earn really agreed to a deal at such price. Though someone very close to the transaction said the equity they accepted has the same value as the $8 billion offer to investors.

The Previous Value of Coinbase

The offer Coinbase made to Earn (a paid messaging service), says a lot about how the digital currency trading firm values its securities. Last summer, venture capitalists valued Coinbase at about $1.6 billion, but that was before an upsurge of interest in retail digital currency trading as the value of crypto assets such as Bitcoin rose and fell late last year and early this year.

409a Valuation

Coinbase would only value the stock at that price after completing its 409a valuation (which usually occurs after an acquisition). The offer is likely to have a significant effect on the market value of the firm in its next 409a evaluation.

Most times, the management only choose to issue the stock options after the finalization of the report. Preferred stock (what investors buy) usually have a separate value from common stock (this is what’s granted to staffs). Preferred stock is usually used when referring to the value of the firm.

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Recently, Coinbase investors were approached by brokers that want to purchase existing shares at a price ranging from $4.5 billion to about $6 billion – according to individuals close to the deal. But valuations will only be official when the firm gets a new 409a valuation (usually from a third-party firm).



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