What’s Happening With Coinbase Stock?

COIN: Coinbase Global logo
COIN
Coinbase Global

Cryptocurrency exchange Coinbase stock (NASDAQ: COIN) has gained almost 50% from all-time lows seen in late June while rallying by close to 25% over the last week (five trading days). There has been a small recovery in cryptocurrency prices, with crypto bellwether bitcoin up by about 15% from lows seen in early July. Despite a tough economic environment, investors have been increasing exposure to riskier assets and growth stocks in recent weeks, with technology indices up over the last month or so, and it’s possible that this could help bitcoin, which remains down about 54% year-to-date. Moreover, through the current crypto bear market, several smaller platforms such as Celsius and Voyager Digital have filed for bankruptcy, while suspending account withdrawals. These developments might eventually help more established and well-capitalized players such as Coinbase, as things eventually get better. Coinbase’s cash and cash equivalents at the end of Q1 2022 stood at $6.1 billion.

So, is Coinbase stock poised to rally further? While it’s hard to time an entry into the stock amid the market volatility, there are some factors worth considering for potential investors. Things are likely to remain dicey for non-productive assets such as crypto, through the Fed’s monetary tightening, which will almost certainly continue to weigh on crypto trading activity on platforms such as Coinbase. However, cryptocurrencies such as bitcoin have also shown resilience in the past, bouncing back stronger after big sell-offs and we could see this yet again as the crypto cycle turns (typically two to four years, per Coinbase). Coinbase has shown potential for extraordinary profits during good times. Over 2021, the company’s total profits stood at $3.6 billion on revenues of just about $7.4 billion. These factors could make the risk-to-reward positioning of the stock still attractive, versus historical levels, considering that the stock still remains down 70% year-to-date.

We value Coinbase stock at $150 per share, which is significantly ahead of the current market price of $71 per share. See our analysis on  Coinbase Valuation: Expensive or Cheap? for more details on Coinbase’s valuation. Also, check out our analysis on Coinbase Revenues: How Does COIN Make Money? for details on the company’s key revenue streams and how they have been trending.

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What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 COIN Return 51% -72% -72%
 S&P 500 Return 5% -17% 77%
 Trefis Multi-Strategy Portfolio 10% -16% 235%

[1] Month-to-date and year-to-date as of 7/25/2022
[2] Cumulative total returns since the end of 2016

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