Because no one On the harder side than I do, I spent part of my week reading through Coinbase’s investor call after its earnings report. The US crypto exchange gets some questions from non-analysts in its chats, which makes for a slightly more interesting set of prompts and answers. You can read them all this.
I put it up because someone asked Coinbase if the company could uncover a “strategic advantage in acquiring or merging with Robinhood.” You might be shocked to learn that Coinbase isn’t outright promoting the idea.
The exchange explores startups, markets and money.
And yesterday, the CEO of Coinbase’s FTX rival, Sam Bankman-Fried, disclosure that he purchased 56,273,469 shares of Robinhood, representing about 7.6% of the company’s common stock.
Shares of Robinhood are surging in pre-market trading, up nearly 24% on the news. Why? Because investors are hoping that FTX will take Robinhood at a premium. If FTX buys Robinhood, investors will likely expect an exit price much higher than its falling share price. Thus, when the FTX CEO turns to buy the stock, its potential short-term exit value rises higher, causing it to be bought.
There is an interesting tension between Coinbase and FTX news that we should unpack. Today is Friday, and we deserve to think a bit. Have a little fun!
If stocks go crypto, will crypto go to stocks?
A running joke at TechCrunch is that all fintech companies, no matter where they start, look the same.
A good example of this is SoFi, best known for its student loan refinancing, now offering credit cards, mortgages, business products, checking accounts, etc. SoFi even even offers crypto investment to an extent, which seems like a pretty big distance from where it came from.
The fact that SoFi has grown so widely is not an objection; rather, it’s a reminder that attracting users in the fintech market is expensive. That high cost makes it good business to try to get every user at your fintech company to use as many of the products as possible after they’ve been acquired. The logic here is simple: CAC is CAC, so if you want to increase client leverage, use more LTV. (In a nutshell, CAC means “customer acquisition cost,” while LTV refers to a customer’s lifetime value.)
This is also why we have seen Square go Block and expand its wings on fiat and web3 economies, why you can buy and sell crypto with PayPal etc.
However, when Coinbase held the earnings call, president and COO Emilie Choi said the following answer to a question about possibly buying Robinhood (emphasis TechCrunch):