Coinbase: As crypto exchange shares tumble, is it time to buy?

Shares of the Coinbase Global cryptocurrency exchange (NASDAQ 🙂 have been under pressure since they started trading on April 14, 2021. again.

COIN weekly chart.

But this bearish period works against improving growth prospects for the largest cryptocurrency exchange in the United States and the first major cryptocurrency-focused company to go public. With the interest of individual and institutional investors in the digital coin, Coinbase is well positioned to benefit.

The latest figures from the San Francisco-based company reinforce our view that COIN stock is on a high growth trajectory and is a good buy when weak. In the, released last month, Coinbase’s total trading volume grew almost 38% sequentially, even as it fell from its all-time high.

The volume of institutional transactions increased by 47%, while the volume of retail transactions increased by 21%. Retail investors pay higher fees than institutional traders and accounted for nearly 95% of Coinbase’s transaction revenue in the quarter. During the period, Coinbase added more assets for trading than in 2020. It now supports 83 assets for trading and 142 for custody.

Riding this wave of investment, Coinbase’s profitability has skyrocketed. The company reported net income of $ 1.6 billion, more than double the consensus forecast of $ 683.3 million predicted by analysts. Sales for the quarter increased by $ 2 billion, also beating consensus estimates.

Cash accumulation

This impressive financial profile ranks Coinbase among the few tech companies that have been profitable from their first day of trading.

To deal with the uncertainties associated with the crypto market, Coinbase has built up a stockpile of $ 4 billion of cash. The company puts its balance sheet under stress tests to ensure it has sufficient funds to prepare for a stricter regulatory regime, possible cyberattacks, or potential trade declines.

Despite this strengthening of the financial situation, investors should not downplay the risks associated with investing in crypto assets. The Securities and Exchange Commission is investigating Coinbase into a loan program the company plans to market and has said it will sue the company over the offer, on the Wall Street newspaper reported earlier this week.

Coinbase co-founder and CEO Brian Armstrong revealed the dispute in a series of tweets late Tuesday. He called the SEC’s actions “sketchy” and referred to “behind-the-scenes intimidation tactics,” saying other crypto companies are in a position to offer such programs.

Still, many Wall Street analysts view COIN as a solid investment, especially for investors who want to add crypto exposure to their portfolio and don’t like the extreme volatility of digital coins. Oppenheimer, who has an “outperformance” rating on the stock with a price target of $ 444, said in a recent note that the company will play a critical role in developing the crypto ecosystem.

His note read:

“Longer term, whether we’re into crypto in the winter or the summer, we favor the trend of crypto adoption and the disruptive nature of digital assets. For us, Coinbase is a catalyst for crypto innovation and will have a strong voice in leading the development of digital assets. “

Final result

Coinbase has a strong appeal for investors who want to have cryptocurrency exposure in their wallet. The stock closed at $ 258.20 on Wednesday. The current weakness in COIN stocks, in our view, offers a good entry point for these investors.




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