On Tuesday, Coinbase (NASDAQ: COIN) introduced its earnings for the primary quarter of 2022, stating that it generated $1.17 billion in income for the interval, whereas the markets had been anticipating it to ship $1.48 billion. That $310 million miss represented a 50% decline in income from the earlier quarter. Throughout the earnings call, Coinbase CEO Brian Amstrong blamed the underwhelming efficiency on the broader financial downturn.
“I believe it is price simply addressing the elephant within the room, which is that, in fact, the broader markets are down. We’re seeing a down marketplace for development tech shares and danger property. And naturally, Coinbase and crypto isn’t any exception to that. So, the excellent news is that as a crypto firm, we have lived by means of many various cycles in crypto, together with main drawdowns which, I believe, make us well-suited to function by means of these environments,” stated Armstrong.
At time of writing, COIN was buying and selling at $56.70 per share, which is a 33% lower from yesterday’s peak worth of $85.03 at 9:45 a.m. EST, in accordance with Yahoo! Finance. Regardless of the adverse income numbers, the buying and selling platform noticed a year-over-year improve in its month-to-month transacting customers (MTUs). Coinbase had 9.2 million MTUs within the first quarter of this yr, in comparison with 6.1 million in 2021, marking a 50% improve. The variety of energetic month-to-month customers is a crucial measure of well being for the change and bodes properly for its future.
How Coinbase makes cash
Coinbase is presently the biggest cryptocurrency exchange in america, and it makes most of its cash from charges it expenses customers to purchase and promote digital property on the platform. For the previous few quarters, it has made centered efforts to diversify into extra secure recurring income streams similar to subscriptions and companies like offering companies entry to its Coinbase Cloud computing resolution which is analogous to Amazon’s AWS service; crypto staking; consumer custodial digital wallets; cost companies together with its new bank card; in addition to its long-awaited non-fungible token (NFT) market to compete with OpenSea and Rarity.
“Coinbase has an vital function to play within the crypto financial system as we execute on the second and third pillars of our technique — crypto as a brand new monetary system and crypto as an app platform. We’re investing closely in merchandise similar to Coinbase Pockets and Coinbase NFT to assist us emerge as a frontrunner in these new markets. We’re in a robust place to assist drive and lead crypto’s subsequent part, and that is the place our investments will likely be centered,” the corporate acknowledged in its letter to shareholders issued yesterday.
Is Coinbase a very good purchase?
As background, Coinbase had its preliminary public inventory providing on April 14, 2021, with a launch itemizing worth of $250 a share when it started buying and selling on the tech-heavy NASDAQ inventory change. The worth of COIN inventory surged greater than 70% inside hours of its debut, to hit a excessive of $429.54 earlier than closing its first buying and selling day at $328.28. At the moment, the corporate had a market capitalization of $87.3 billion. Since Coinbase offers buying and selling choices for dozens of the most well-liked and useful digital forex tasks, it’s extensively thought to be a de facto crypto “index fund” that gives broad crypto entry with a single funding automobile.
As of as we speak’s worth motion, COIN is buying and selling at an 87% low cost from its all-time excessive. This isn’t monetary recommendation, and buyers ought to at all times do their very own research and make investments solely quantities they’ll comfortably afford to lose. However given Coinbase’s scale, ease of use, market share, construction as a default crypto index fund, and diversification plans, my private opinion is that it is undoubtedly price contemplating at this worth.
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