In a strategic move to capitalize on its soaring stock price amid a crypto rally, Coinbase, the largest U.S.-based crypto exchange, has announced plans to sell $1 billion in debt to institutional investors. The decision comes as the company’s stock price hovers near its 26-month high, presenting a favorable opportunity for fundraising.
The funds raised through the sale of convertible senior notes will be utilized to address existing debts and cover corporate expenses. The notes, set to mature in 2030, could potentially increase Coinbase’s liabilities by $1 billion, bringing its total debt to $4 billion.
Investors participating in the offering will have the option to convert the notes into Coinbase’s Class A stock, cash, or a combination of both upon maturity. Additionally, an option to purchase an additional $150 million worth of notes may be available within the initial 30 days of the sale.
Despite the announcement, Coinbase shares experienced a minor setback, trading approximately 2% lower in the after-hours session following a modest 0.78% gain during regular trading hours, according to Yahoo Finance data.
Nevertheless, the exchange’s stock has seen remarkable growth, up over 40% in the past year amid a robust rally in crypto prices, spurred by regulatory approvals for various bitcoin-based investment offerings. With a market capitalization of $61.58 billion and $5.4 billion in cash reserves as of last year, Coinbase remains a significant player in the crypto market.
However, the company is still recovering from market turbulence triggered by the collapse of FTX in November 2022, coupled with ongoing legal battles with regulators in federal court. Despite generating $3.1 billion in revenue last year, a substantial decline from the previous crypto bull run’s $7.8 billion in 2021, Coinbase is strategically positioning itself to navigate challenges and capitalize on opportunities in the evolving crypto landscape.
