Crypto exchange Coinbase announced plans to raise $2 billion through the sale of convertible notes following a revenue drop and stock decline.
Plans for Convertible Notes Offering
On August 5, Coinbase released information about its intention to offer $2 billion in convertible senior notes to institutional buyers. This includes $1 billion in notes maturing in 2029 and 2032. Additionally, early purchasers will have the option to buy an extra $150 million of the 2029 notes and $150 million of the 2032 notes.
Potential Use of Proceeds
The company plans to use part of the proceeds for transaction costs related to the capped call transactions as well as to pay initial purchasers. The remaining proceeds are intended for general corporate purposes, including working capital, capital expenditures, and investments in other companies.
Decline in Coinbase Stock
Coinbase's stock has dropped over 20% in a week following Q2 earnings reports indicating a 26% revenue decline. On August 5, shares were trading at $301.70 despite higher price predictions from some Wall Street analysts. Cathie Wood from ARK Invest sold millions worth of Coinbase stock but later bought $30 million worth after the price fell.
The overall revenue decline and market volatility pose challenges for Coinbase, but the plans for convertible notes may assist the company in future growth.
