Coinbase is raising $2 billion by selling special debt called convertible notes. These notes will come due in 2029 and 2032. Buyers can add another $300 million if they want. The notes pay interest twice a year and can turn into Coinbase shares later. When that happens, there will be more shares, and current owners will own a smaller piece of the company. That is called dilution.
Coinbase will try to limit this by using something called capped calls. These help reduce the number of new shares that get created when the notes turn into stock. Still, Coinbase needs cash now and is willing to dilute its current shareholders. The crypto market is shaky, so this is a risky move. After the news, Coinbase’s stock fell 1% because investors worry about dilution and what it means for the future.
Convertible notes let Coinbase borrow money now without selling shares right away. But later, when the notes convert, shareholders get diluted. Whether this new cash helps the company grow enough to make up for that remains to be seen.
“Coinbase is offering $2 billion in convertible senior notes due 2029 and 2032, with an option for an extra $300 million.”
https://www.investing.com/news/stock-market-news/coinbase-shares-fall-after-2-billion-convertible-notes-offering-4169844
“The notes pay interest twice a year and can be converted into cash or shares, which dilutes current shareholders.”
https://www.investing.com/news/stock-market-news/coinbase-shares-fall-after-2-billion-convertible-notes-offering-4169844
“The money will fund capped call deals, acquisitions, and general business needs.”
https://www.investing.com/news/stock-market-news/coinbase-shares-fall-after-2-billion-convertible-notes-offering-4169844
“Shares dropped 1% after the news, showing investor worries about dilution.”
https://www.barrons.com/articles/coinbase-stock-coin-debt-offering-8120241d
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