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Is Recently Listed Coinbase a Falling Knife or a Value Stock?
Stock Analysis & Ideas

Is Recently Listed Coinbase a Falling Knife or a Value Stock?

Story Highlights

Coinbase can coin a turnaround with growth in users and the future potential of the cryptocurrency space. However, depleting revenues and global economic headwinds remain concerns for the near term.

We are living in uncertain times. Geopolitical issues, supply-chain constraints, rising interest rates, record-high inflation and muted demand have brought the capital markets to their knees.

Even the lucrative cryptocurrency market has not been able to save investors from the onslaught witnessed by the capital markets.

So far this year, top cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) are down 39% and 47.6%, respectively. The same fate has been witnessed by one of the largest cryptocurrency exchange platforms in the world, Coinbase.

A Deep Dive into Coinbase

Founded by Brian Armstrong and Fred Ehrsam a decade ago, Coinbase Global, Inc. (NASDAQ: COIN) is the largest cryptocurrency exchange in the United States by trading volume. The company has not limited itself to just cryptocurrencies. Its product offerings include Coinbase NFT, a marketplace where NFT collectors buy and sell their pieces, and Coinbase Pro, a professional asset trading platform for trading digital assets.

Coinbase went for a direct listing on April 14, 2021, when the crypto market was witnessing a boom. The company went public with an opening price of $381. Unfortunately, it is now trading at $66.10, down almost 81%.

Financial Performance

Recently, the company reported weak results for the first quarter of 2022. Revenues dropped 35% year-over-year to $1.17 billion. Meanwhile, it reported a loss of $1.98 per share, compared to a profit of $3.05 per share in the year-ago period.

However, the silver lining came in the form of rising Monthly Transacting Users (MTU), which grew to 9.2 million during the quarter from 6.1 million a year ago.

TipRanks’ Data

Now, let’s analyse Coinbase from TipRanks’ spectacle.

According to the TipRanks Website Traffic Tool, the Coinbase website recorded a 9.05% monthly decline in global visits in April, compared to March. However, the footfall on its website has increased 59.55% year-to-date, compared to the previous year.

Based on informative transactions by two insiders over the past three months, TipRanks’ Insider Trading Activity tool shows that the confidence in COIN is currently Positive. Notably, corporate insiders have bought shares worth $75 million over this period.

Meanwhile, TipRanks’ Stock Investors tool shows that top investors currently have a Very Positive stance on COIN, as 3.5% of the top portfolios tracked by TipRanks increased their exposure to COIN stock over the past 30 days.

However, TipRanks’ Hedge Fund Trading Activity tool shows that the confidence of hedge funds in COIN is currently Very Negative. Further, the cumulative change in holdings across all 12 hedge funds that were active in the last quarter was a decrease of 600,400 shares.

Stock Rating

Recently, Mizuho Securities analyst Dan Dolev reiterated a Hold rating on the stock with a price target of $60, which implies downside potential of 9.2% from current levels.

Overall, the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 14 Buys, four Holds and two Sells. COIN’s average price target of $177.39 implies that the stock has upside potential of 168.4% from current levels. Shares have declined 70.7% over the past year.

Conclusion

Coinbase’s mammoth trading volume, future growth potential and its venture into the NFT space give the company a strong footing to weather the ongoing market volatility and perform well.

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