Stock (Symbol) |
Coinbase (COIN) |
Stock Price |
$187 |
Sector |
Financial |
Data is as of |
April 1, 2022 |
Expected to Report |
May 12 |
Company Description |
Coinbase Global, Inc. is a financial technology company that provides end-to-end financial infrastructure and technology. It is primarily focused in building cryptoeconomy, a transparent financial system enabled by crypto that leverages crypto assets, a digital asset that is built using blockchain technology. Its platform enables approximately 43 million retail users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries to participate in the cryptoeconomy. For retail users it offers primary financial account to invest, store, spend, earn and use crypto assets. It provides one-stop shop for hedge funds, money managers and corporations for accessing crypto markets through advanced trading and custody technology. The Company provides developers, merchants and asset issuers a platform with technology and services that enables them to build applications that leverage crypto protocols, participate in crypto networks and securely accept cryptocurrencies as a payment. Source: Thomson Financial |
Sharek’s Take |
Wait, what? Last qtr, Coinbase (COIN) was expected to make $6.93 a share in 2022. Now that figure is $0.74. Where’s the profits? Well, they’re going to invest in upcoming business opportunities like derivatives (calls and puts) as well as NFTs (which are basically computer generated gif images). For 2022, if COIN performs at the middle or high range of managements projections, the company expects to be profitable. Wow, that’s not a vote of confidence in the stock as the company made $14.50 in EPS in 2021. If COIN performs at the low end of its range, management expects a loss of less than $500 million.
Coinbase is a platform to invest in, store, and trade cryptocurrency (and other related products). The company boasts more than 89 million users in more than 100 countries (as of Fiscal Year 2021). Coinbase also offers infrastructure tools and technology to other cryptocurrency service providers, including trading APIs and data access. A majority of revenue is from transactions in Bitcoin and Ethereum. The company invests heavily in regulatory compliance by working with regulators around the world to shape policy, and has pioneered industry-leading security practices for safeguarding crypto assets. The company has risk of cryptocurrencies declining in value, and cyberattackes that could cause hackers to steal its customer’s cryptocurrencies. The company counts both retail investors and institutions as customers to transact in crypto (source: COIN prospectus):
Here’s some recent moves COIN has made:
Coinbase has a reputation of having a the safest crypto-security platform, and for charging higher fees. The “take rate” if 3% to 4% of customer assets is high, and is likely to decline over time as competing asset managers enter the crypto market. COUN was added to the Aggressive Growth Portfolio last qtr. I will sell COIN from the Aggressive Growth Portfolio, this is a risky asset at a time when higher interest rates are taking a bite out of speculative stocks. |
One Year Chart |
This stock had a PE of 33 last qtr, as we thought the company would earn $6.93 a share. Now, with that estimate at $0.74, the P/E is is a lofty 253.
The Est. LTG of 67% is outstanding. This figure was unchanged since last qtr. Notice the company was making profits, and next qtr’s N/A signifies a loss is expected. |
Earnings Table |
Last qtr, Coinbase recorded 269% profit growth and surpassed expectations of 90% growth. Revenue increased 401%, from last year. Transaction revenue jumped 378% and accounted for 91% of company sales. Subscription and services revenue accelerated 931% and accounted for 9% of total sales. Trading volume in the platform increased 515%. Monthly transacting users (MTU) grew 307% to over 11 million.
Sales growth, during the qtr, was driven by crypto use cases like non-fungible tokens (NFTs), adoption of decentralized finance, play-to-earn games, and metaverse transactions. Qtrly Profit Estimates for 2022 just went from $6.93 to $0.74 a share. Whew! Qtrly Profit Estimates are poor. Analysts expect just one qtr of profitability this year. |
Fair Value |
My Fair Value P/E remains at 35x profits, which works out to $26 for 2022 and $109 for 2023. lolol. That Fair Value P/E was from last qtr, and I’m not changing it — I’m selling the stock instead. |
Bottom Line |
Coinbase (COIN) has been a wild stock since it went public in April 2021. Now the shares are in a downtrend.
Coinbase has perhaps the safest wallets for cybercurrency, and the company charges a premium price on transactions for this perk. This is good for profits, but competitors with lower prices will likely force this company to reduce its profit margins. Lower margins is the big picture, not excessive spending. Coinbase will be removed from the Aggressive Growth Portfolio today. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |