tiprankstipranks
Coinbase Stock: Continuous Development despite Share Decline
Stock Analysis & Ideas

Coinbase Stock: Continuous Development despite Share Decline

Coinbase (COIN) has an international footprint as a major provider of end-to-end financial infrastructure for the “crypto-economy.”

While Coinbase is without a doubt a speculative investment to some extent, it also bears the potential to be a highly rewarding one. Unfortunately, the stock has been under pressure over the past few months, with investors likely questioning the company’s ability to sustain its current growth and profitability metrics in the future.

In the meantime, however, nothing seems to have changed regarding Coinbase’s business model and future prospects. If anything, the company has been making multiple meaningful advancements lately, with its most recent one including the acquisition of crypto derivatives exchange FairX to further enrich its crypto ecosystem’s capabilities.

In my view, the company’s parallel strategy, which comprises providing retail users with access to all-in-one financial accounts, and granting large institutions a secure marketplace with adequate liquidity levels, places Coinbase in an advantageous position amongst its industry peers.

With cryptocurrencies’ acceptance as an alternative asset class with a myriad of potential applications arising by the day, Coinbase’s distinctive nature as an infrastructure piece in the whole crypto-economy enables investors to reap the fruits of this growing market, with a significantly higher margin of safety relative to investing directly in the various coins.

Numbers hardly ever lie, and Coinbase’s latest results greatly illustrated the company’s ability to grow exponentially, with revenues growing 316% to $1.31 billion. Investors are likely worried about Coibase’s retail transaction revenue which came in at $1 billion, suggesting a decline of 44% sequentially. 

However, this should hardly raise any worries. The company’s performance is dependent on the underlying volatility in cryptos. Hence, quarter-over-quarter revenue fluctuations should be expected.

What matters, instead, is the long-term trend in Coinbase’s KPIs (key performance indicators), which are clearly snowballing. Monthly Active Users, for instance, rose 252% to 7.4 million versus the comparable period last year. 

Another noteworthy KPI is the company’s increasing institutional appeal, which reaffirms Coinbase’s industry-leading role in the field. Finally, to illustrate how Coinbase’s continuous advancements can result in explosive growth metrics, the company’s Prime service for institutional investors, which launched in mid-Q3 and combines extensive trading tools, trusted custody, advanced analytics, and financing in a single application, contributed to institutional trading volumes reaching $234 billion, a massive 766% increase year-over-year.

Powered by a unique position as the only U.S.-based publicly traded company in the space, Coinbase should continue to be the first choice for institutions to get into the crypto-economy. 

This is due to Coinbase’s transparent operations and financials as per its publicly traded status. Hence, institutional tailwinds should be strong going forward.

Wall Street’s Take

Turning to Wall Street, Coinbase has a Strong Buy consensus rating, based on 13 Buys, one Hold, and one Sell assigned in the past three months. At $419.64, the average Coinbase stock forecast implies 82.4% upside potential.

Conclusion

In my view, the recent decline in Coinbase stock’s price is mostly unjustified, likely signaling a buying opportunity. The crypto-economy continues to evolve, while Coinbase’s growth and profitability metrics are too good to ignore. 

With the company further solidifying its position in the space following its most recent acquisition, Coinbase remains my favorite play in the industry and one of the best NFT stocks out there.

Download the TipRanks mobile app now  

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.  

Read full Disclaimer & Disclosure 

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles