Coinbase Valued at $86 Billon in ‘Landmark Moment’ for Crypto

Shares in Coinbase, the first major cryptocurrency company to list its shares on a U.S. stock exchange, jumped in their market debut on Wednesday, showing that investors are hungry to get a piece of the hot market for digital currencies.

Coinbase began trading on Wednesday afternoon at $381 a share, a 52 percent increase over a $250 reference price set by Nasdaq on Tuesday. (A reference price is set by a stock exchange based on expectations for where the stock will open.)

The stock swung as low as $310 and as high as $429 in a volatile day of trading that reflected the unpredictable nature of cryptocurrency prices. Coinbase ended the day at $328.28, valuing the company at $85.7 billion counting all of its outstanding shares — more than 10 times its last valuation as a private company.

Founded in San Francisco in 2012, Coinbase allows people and companies to buy and sell various digital currencies, including Bitcoin, the most popular, and Ether. The company, which takes a transaction fee, has been riding high on a boom year for cryptocurrencies, as investors have poured money into the assets and driven their prices to new highs.

This week, the price of Bitcoin hit a record $64,000 amid excitement for Coinbase’s listing, double its value at the beginning of this year. On Wednesday, prices had come down to $61,939.

Unlike many other start-ups that go public, Coinbase is profitable. In the first three months of the year, it estimated it made $730 million to $800 million in net profit on $1.8 billion in revenue. But the company warned in its financial prospectus that its business performance was closely tied to the price of cryptocurrencies, which are volatile.

Coinbase has raised more than $500 million from venture capital investors, who last privately valued it at $8 billion. Its largest shareholders include Andreessen Horowitz, Tiger Global and Paradigm, a crypto-focused investment firm.

Brian Armstrong, Coinbase’s chief executive and a co-founder, owns nearly 40 million shares in the company, making his stake worth roughly $13 billion. Over the last year, Mr. Armstrong has said Coinbase employees should avoid political discussions, a stance that has caused controversy. Some of the company’s former Black and female employees have also spoken out against unfair treatment and were found to have been underpaid in a company report.

Coinbase went public through a direct listing, an unusual transaction where no new shares are issued or sold — they simply start trading. Coinbase is the largest company to go public via direct listing, which has become popular among well-funded Silicon Valley start-ups that do not need to raise more cash from public market investors. Direct listings do not have traditional lockup periods that prevent insiders from selling shares for the first six months after the listing.

Coinbase’s listing on the Nasdaq stock exchange gives traditional investors, who may be interested in digital currencies but are unable or unwilling to buy them directly, an indirect way to buy into the market. The company’s financial prospectus included a glossary of crypto-specific terms, including internet slang like “hodl,” which means holding on to your cryptocurrency investments even when the prices tank.

As demand for cryptocurrencies has surged this year, Coinbase has struggled to keep up with the demand. Some customers whose accounts were plundered by attackers or who were locked out of their accounts have said the company ignored their pleas for help.

Coinbase, the cryptocurrency exchange, began trading on the Nasdaq on Wednesday. Here’s what you need to know about crypto’s move into the mainstream.

Why Coinbase matters

The company is the first major crypto business to trade publicly in the U.S. Its size means that its stock is likely to be held by mainstream index funds, giving average investors (indirect) exposure to the world of crypto. “Hopefully Coinbase going public and having its direct listing is going to be viewed as kind of a landmark moment for the crypto space,” Brian Armstrong, Coinbase’s chief executive, told DealBook’s Andrew Ross Sorkin in a CNBC interview.

It instantly became a financial giant on Wall Street.

• At $86 billion, Coinbase’s market value exceeds that of the stock exchanges its shares will trade on: Nasdaq’s market cap is $26 billion, while ICE, the parent company of the N.Y.S.E., is valued at $67 billion. And by the way, Goldman Sachs’s market value is $111 billion.

• Coinbase is profitable, taking in $322 million last year — and an estimated $800 million in the first quarter this year alone. It also made significantly more revenue from trades (0.6 percent) than did the Nasdaq (0.009 percent) and ICE (0.011 percent).

But there are also giant risks.

• Coinbase benefited hugely from a run-up in cryptocurrencies’ prices in recent months, and the company warned in its prospectus that its business was “substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform.”

• Skeptics think competition will eventually bring Coinbase’s fat margins down, though Mr. Armstrong asserted that he didn’t seen any sign of that happening yet. “Longer term, yes, I do think there could be fee compression, just like in every other asset class,” he told CNBC.

Digital currency, once mocked as a tool for criminals and reckless speculators, is sliding into the mainstream. On Wednesday, Coinbase, a start-up that allows people to buy and sell cryptocurrencies, went public on Nasdaq, marking the biggest step yet toward wider acceptance.

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Kimberly Godwin, a veteran CBS News executive, was named the next president of ABC News on Wednesday, making her the first Black woman to lead a major broadcast network’s news division.

Ms. Godwin replaces James Goldston, who announced his departure from ABC in January. Her appointment was guided by Peter Rice, the chairman of general entertainment at The Walt Disney Company, which owns ABC. She will begin in her job in early May.

Her promotion is just one of several changes in the world of broadcast news as the industry adjusts to the end of Donald J. Trump’s presidency and to shifting viewing habits among audiences who are showing signs of fatigue after years of devouring TV news.

CBS News is expected to announce in the coming days a successor for its own president, Susan Zirinsky, who is leaving to take on a producing role at ViacomCBS. CNN’s president, Jeff Zucker, said he will depart the cable network by the end of the year, and Rashida Jones recently became the new president of MSNBC. When Ms. Jones took over MSNBC, she became the first Black woman to run one of the three major cable news channels.

Ms. Godwin, who most recently served as CBS’s executive vice president of news, joins ABC at a moment of strength for the network.

ABC’s “World News Tonight,” anchored by David Muir, is the top-rated evening newscast, averaging 9.4 million viewers for the season. It is the widest lead ABC has held over the “NBC Nightly News,” which averages 7.9 million viewers, since 1995, and the biggest lead over CBS’s evening newscast (5.8 million viewers) in at least 29 years.

Likewise, “Good Morning America” on ABC is still the No. 1 morning show in viewers, though it continues to trail the “Today” show on NBC among adults 25-54 years old, the adult age group most important to advertisers.

“Throughout Kim’s career in global news organizations and local newsrooms, she has distinguished herself as a fierce advocate for excellence, collaboration, inclusion and the vital role of accurate and transparent news reporting,” Mr. Rice, the Disney executive, said in a statement.

Ms. Godwin said, “I am honored to take on this stewardship and excited for what we will achieve together.”

News divisions at ABC and elsewhere are facing a drastically changed news cycle. Cable news networks have seen declining ratings in the last two months, and audiences for all of the morning shows and evening newscasts are down considerably from a year ago, when the onset of the pandemic spurred significant interest.

ABC News also grappled with internal tensions last year, after an investigation backed complaints about racially insensitive comments made by a longtime top executive, Barbara Fedida, who has since left the network.

More than a decade ago, Grupo Televisa of Mexico and Univision of the United States, giants in the world of Spanish-language media, set aside years of hostility to strike an alliance. Now, the two companies are deepening their bonds to better compete in the streaming era.

Televisa agreed on Tuesday to sell its media, content and production assets to Univision for $4.8 billion. The deal includes SoftBank and Google as financial backers.

It is the latest evolution in the ties between Televisa and Univision, whose relationship has been strained at times: They battled in court over Televisa’s attempt to end a 25-year contract with Univision to make telenovelas, crucial programming for the Spanish-language market, settling just before Televisa’s chairman was set to testify.

The two have grown closer in recent years, beginning with a licensing deal in 2010. Televisa, which produces much of the programming that airs on Univision, owns just over a third of the company.

Together, the two companies dominate the Spanish-language broadcast markets in the United States and Mexico. Their traditional business has held up, with Univision’s ratings rising last year, but executives said they believed that creating a dominant streaming service was the future.

There is room for growth: Executives of both companies estimate that just 10 percent of the 600 million viewers in the Spanish-language media market use an online video service, compared with 70 percent of the English-speaking population.

But competing with services like Netflix required much bigger scale, prompting the two companies to consolidate further. The new business, to be called Televisa-Univision, will have an enormous content library — Televisa produced 86,000 hours of programming last year — broadcast and pay-TV channels and stations and a movie studio. The new business will also control the two companies’ online video services, PrendeTV and Blim.

“We had to gain scale and unify the media rights to compete against the giants,” Bernardo Gómez Martínez, one of Televisa’s co-chief executives, said in an interview.

The executives said that beyond the sheer amount of resources Televisa-Univision will have, the new company also has an advantage that others like Netflix do not: a foundation in the Spanish-language market.

“Those companies are first and foremost English-language companies,” said Wade Davis, Univision’s chief executive. “At the core of it, their core offering is not Spanish language first.”

As part of the deal, Univision and Televisa are bringing in $1 billion in new investment to their venture. Among the investors are SoftBank’s Latin America Fund, Google and the investment firm Raine Group.

The transaction is expected to close by the end of the year, pending approval by regulators in the United States and Mexico and by Televisa’s shareholders.

Jerome H. Powell, the chair of the Federal Reserve, said the central bank pays attention to inequality because it can restrain the economy’s potential when people do not have opportunities to succeed.

“We all want an economy where everyone has the opportunity to contribute to and benefit from prosperity,” Mr. Powell said during an appearance at the Economic Club of Washington, D.C., noting that the Fed has recently defined its full employment goal as “broad and inclusive” in as it tries to incorporate economic divides into its policy thinking.

“We call them out, we talk about them,” he said of the inequalities.

Mr. Powell’s comments come at a time when the Fed has faced increasing criticism from Republicans for its attention to racial equity and climate change, issues central bank officials often say have economic and financial stability implications but which some lawmakers paint as too political for the central bank. The Fed is independent of the White House and is supposed to be nonpolitical so that it can make prudent long-term economic decisions.

Mr. Powell underlined that the Fed isn’t trying to do the job of Congress.

“We can’t be the primary policy organization that treats either climate change or inequality — we see it through the lens of our existing mandates,” Mr. Powell said Wednesday. “Those are very much issues for elected representatives.”

Separately, he said that while his institution works with the Biden administration on economic issues, he has not met with the president.

“Meetings with presidents and Fed chairs are very, very, very infrequent,” he said.

Mr. Powell was appointed to the Fed by former President Barack Obama and was elevated to chair of the central bank by Donald J. Trump. His term expires early next year, so Fed watchers have been attentive to his interactions with the Biden administration as they try to game out whether Mr. Powell wants — or will be tapped for — another term. There has been little signal either way so far.

For now, his public appearances have remained focused on the path ahead for monetary policy. The Fed has kept its policy interest rate at rock bottom, and it is buying $120 billion in bonds each month to keep many kinds of borrowing cheap, policies meant to help the economy heal from pandemic damage.

Mr. Powell and his colleagues are watching for progress toward their 2 percent average inflation goal and full employment before changing those policies.

Some economists have fretted that inflation might pick up as the Fed takes a patient stance and as the government spends heavily on pandemic relief. But the Fed has been more concerned with lifting price gains, which have been weak for a quarter century.

“You’ve seen central banks around the world really struggle to reach a 2 percent goal,” Mr. Powell said Wednesday. “You can get into a cycle, if you will, that’s not a productive one.”

When it does come time to scale back support for the economy, the central bank will probably slow its bond-buying “well before” it lifts its policy interest rate, Mr. Powell said on Wednesday.

He also suggested that as bond-buying policies draw to a close, they will likely follow a similar path to the one the Fed employed after the financial crisis. Officials will first slow bond investments, then stop them, and then eventually will allow bonds to mature without reinvestment, shrinking the balance sheet passively.

“I don’t think we now would ever actually sell bonds into the marketplace,” he said. He made it clear that the policy-setting committee hasn’t actually made those decisions yet.

The Treasury Department is building a new team to oversee the hundreds of billions of dollars of pandemic relief money that is being pumped into the economy and to ensure that the funds are being distributed fairly, officials said on Wednesday.

The Office of Recovery Programs will work closely with the White House and Gene Sperling, who was tapped last month to oversee spending related to the recently passed $1.9 trillion relief legislation. The new team at the Treasury will be led by Jacob Leibenluft, a top adviser to Treasury Secretary Janet L. Yellen, who will report to the deputy secretary, Wally Adeyemo.

The new structure is being created to ensure “a smooth and equitable implementation of relief and recovery programs” and so that recipients of federal funds have a single point of contact within the federal government, Mr. Adeyemo said.

The structure is a response to the informal and sometimes haphazard approach that the Trump administration had for deploying and tracking relief money coming from programs that were created quickly to respond to the pandemic.

The new team will have a chief financial officer, a chief compliance officer and an operations manager as well as additional staff to manage specific programs.

The Treasury Department is overseeing nearly $420 billion in programs from the American Rescue Plan in addition to unspent funds from the relief packages that were created in 2020. That includes fiscal support funds for states and cities, with homeowner and rental assistance programs and money for pandemic-related infrastructure projects.

A Treasury official could not give an estimate of how much money from the March relief package had been distributed to far.

Toshiba announced on Wednesday the resignation of its top executive, Nobuaki Kurumatani, a move that comes as the Japanese conglomerate faces a potential buyout and a shareholder-initiated investigation into its management practices.

The board appointed Satoshi Tsunakawa — the current chairman and previous president — to replace Mr. Kurumatani, the company said in a brief statement. It did not explain the reason for the change.

Toshiba, once among the crown jewels of Japanese industry, a maker of products ranging from personal printers to railroad locomotives, has struggled in recent years, overshadowed by the legacy of a major accounting scandal and its acquisition of the American nuclear power company Westinghouse, which declared bankruptcy in 2017.

Seeking to rebuild, Toshiba looked for a new leader from outside its own ranks, and in 2018 it appointed Mr. Kurumatani, an executive with CVC Capital Partners, a private equity company based in Europe, as chief executive. It was an unusual decision for a company that had long been headed by company insiders. Last year, he was appointed president, solidifying his control over the firm.

During a news conference Wednesday, board member Osamu Nagayama deflected questions about the resignation, saying that Mr. Kurumatani, 63, had been considering the move for months and had come to the decision with his family. Unusually, Mr. Kurumatani did not make an appearance, but in a letter that was read aloud to reporters, he said he had chosen to resign after “achieving my mission to rebuild the company.”

The announcement on Wednesday followed months of unrest at Toshiba as disgruntled shareholders agitated for reforms aimed at improving the company’s performance and increasing its value.

Toshiba investors tried to shake up the company’s management at the annual general meeting last summer. But Mr. Kurumatani was re-elected — albeit with less than 60 percent of the vote — following a showdown that angered some key shareholders and raised questions about whether the company had inappropriately interfered in the decision.

Effissimo Capital Management, a Singapore-based hedge fund that holds about 10 percent of the company and had led the campaign to unseat its management team, subsequently called for an investigation into the outcome. Other shareholders agreed, voting, over management’s objections, to begin an independent inquiry in March.

Earlier this month, Toshiba announced that it had received a buyout offer from CVC Capital Partners for a reported $20 billion, a substantial premium on the company’s share price. The offer has raised questions of conflict of interest, as Mr. Kurumatani had previously served as president of CVC’s Japan office.

In recent years, Japanese companies have increasingly been the focus of activist investors from abroad, who believe that sclerotic management and opaque governance practices have prevented many of Japan’s blue chip firms from achieving their full value.

Hisako Ueno contributed reporting.

Coinbase

• Coinbase, which allows people and companies to buy and sell digital currencies, began publicly trading on Wednesday. Its shares ended their first day of trading at $328.28 after receiving a reference price of $250 each, down from their high of about $425.

• Coinbase, which makes money through transaction fees, estimated it took in $1.8 billion in revenue in the first three months of the year as cryptocurrency prices soared.

• On Wednesday, the fervor continued: Bitcoin, the largest cryptocurrency, climbed above $64,000 to a record, before falling back to $62,120, and shares in Bit Digital, a Chinese bitcoin mining company traded in the United States, rose as much as 12 percent before ending the day down nearly 7 percent.

Elsewhere in the Markets

• The S&P 500 fell 0.4 percent after reaching a record on Tuesday. The Stoxx Europe 600 index gained 0.2 percent.

• Yields on 10-year U.S. Treasury notes ticked up to 1.63 percent.

• Oil prices climbed. Futures for West Texas Intermediate, the U.S. crude benchmark, rose 4.5 percent to $62.91 a barrel.

Company Earnings

• JPMorgan Chase fell 1.9 percent after the bank reported its best first quarter on record but said demand for loans was “challenged.” Goldman Sachs rose 2.3 percent after reporting investment banking revenue that beat analyst expectations.

• SAP rose more than 1 percent after the German software company said revenue from its cloud business was growing and upgraded its forecast for full year earnings.

• Shares in easyJet, the low-cost airline, rose nearly 6 percent after it said it expected to increase flights from May and reported earnings for the six months through March that were better than analysts expected.

• Tesco, the large British grocer, fell 2.2 percent after the company reported a 20 percent decline in pretax profit because of the extra cost of operating stores and warehouses safely during the pandemic. The grocer also said it expected sales to decline as pandemic restrictions ease, but that this would improve profit margins.

• Kroger, the grocery store chain, announced on Wednesday that it was building a chain of warehouses to fulfill online orders as demand for grocery delivery continued to grow. Its pilot warehouse, north of Cincinnati, is 375,000 square feet, many times the size of a conventional grocery store, and has all the hallmarks of a high-tech fulfillment operation, with automated robots retrieving products for packaging and computers advising humans on the best way to pack a grocery bag, the company said. The company is planning more warehouses to serve Atlanta, Dallas, Detroit, Orlando, Phoenix and other cities.

• The first woman to lead CBS News, Susan Zirinsky, is expected to announce that she is stepping down from the presidency of the network’s news division, possibly as soon as this week, a person with knowledge of the plan said on Tuesday. Ms. Zirinsky is expected to sign a production deal with the network’s parent company, ViacomCBS, to work on broadcast, cable and streaming programs, according to the person with knowledge of the details of her departure. Ms. Zirinsky, 69, was appointed in January 2019.

• Epic Games, the video game developer that produced the hit game Fortnite, said Tuesday that it had raised $1 billion in funding, valuing the company at $28.7 billion. Sony, the creator of the PlayStation game console, invested $200 million, Epic said, and Appaloosa Management, Baillie Gifford and Fidelity Management were also among the investors. Epic’s most recent funding round came last summer, when it raised $1.78 billion to value the company at $17.3 billion. Sony invested $250 million at the time.

Video

In today’s On Tech newsletter, Shira Ovide writes that it’s time to end the elaborate staged events that are essentially infomercials for new technology products.