TL;DR
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Coinbase has just announced a buyback scheme for corporate bonds.
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To raise money, Coinbase issued $1 billion worth of corporate bonds (essentially IOUs with a fixed yield and maturity).
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But Coinbase shares are up ~160% YTD which is why they just made a very public ‘we support ourselves’ move and instead of offering 60c on the dollar, they’re offering 64.5 cents for anyone who wants to cash out early (up to $150 million).
Full story
Nothing says “we’re backing ourselves on this one” like a corporate bond buyback program.
That’s exactly what Coinbase has just announced.
Here’s what that means:
To raise money, Coinbase issued $1 billion worth of corporate bonds (essentially IOUs with a fixed yield and maturity).
They said, “You (investors) pay us $1 billion, and we (Coinbase) will pay you back $1.6 billion in 2031.”
But as things have played out, Coinbase stock is up ~160% YTD and it doesn’t look like they’ll be slowing down anytime soon.
So they just made a very public “we support ourselves” move instead of offering 60c on the dollar, they’re offering 64.5 cents for anyone who wants to cash out early (up to $150 million).
Corporate buyback programs are usually seen as a positive step for companies – they show they are doing well, making money and expecting more good things in the near to medium term.
This is our opinion:
All in all, this is positive news.
Coinbase stock is up this year and they can almost smell the BTC halving event imminent.
The argument against corporate buyback programs is that companies can use buybacks to artificially inflate their share prices, without making meaningful investments in their core businesses.
On this occasion, we just don’t see that being the case.
Hopefully Coinbase will prove us right!
