TL;DR
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Coinbase has just announced a corporate bond buy back scheme.
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In order to raise money, Coinbase issued $1B worth of corporate bonds (which are essentially I.O.U.’s with a set rate of return and expiration date).
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But Coinbase stock is up ~160% YTD and so they’ve just made a very public ‘we’re backing ourselves’ move and instead of offering 60c on the dollar, they’re offering 64.5c for anyone who wants to cash out early (up to $150M).
Full Story
Nothing says ‘we’re backing ourselves on this one’ like a corporate bond buy back scheme.
Which is exactly what Coinbase has just announced.
Here’s what that means:
In order to raise money, Coinbase issued $1B worth of corporate bonds (which are essentially I.O.U.’s with a set rate of return and expiration date).
They said: “You (investors) pay us $1B, and we (Coinbase) will pay you back $1.6B in return by 2031.”
But as things have played out, Coinbase stock is up ~160% YTD and they don’t look to be slowing down any time soon.
So they’ve just made a very public ‘we’re backing ourselves’ move and instead of offering 60c on the dollar, they’re offering 64.5c for anyone who wants to cash out early (up to $150M).
Corporate buy back schemes are usually seen as a positive move for companies – they show that they’re doing well, making money and expecting more good things in the near- to mid-term future.
Here’s our take:
Overall, this is positive news.
Coinbase stock is up this year and they can almost smell the BTC halving event that’s just around the corner.
The argument against corporate buy back schemes is that companies can use buy backs to artificially inflate their stock prices, without making meaningful investments in their core business.
On this occasion, we just don’t see that being the case.
Hopefully Coinbase proves us right!
