Coinbase Global, Inc. Stocks (PIECE OF MONEY) have been under pressure alongside most other tech stocks these days. Just a bad day or two away from entering single-digit P/E territory, questions remain as to whether the bears, who see Coinbase stock as a value trap, or the bulls, are right.
Indeed, Coinbase is a battleground, and the forward-looking nature of its industry does analysts a disservice when trying to assess the financials. Respected short seller Jim Chanos recently targeted the company for “over-earnings”, also citing that margin pressures may be ahead. We cannot deny it.
In the past, I’ve noted that Coinbase’s fees are above average and that cryptocurrency brokers are susceptible to margin erosion. With the euphoric trading frenzy now behind us, Coinbase faces very high year-over-year comparables. With such a depressed valuation multiple, however, I think it’s clear that no one expects Coinbase to strengthen once the crypto trading tailwinds hit and investors start shedding assets. high risk in their portfolios.
Make no mistake, Coinbase will fluctuate wildly with the price of Bitcoin and other cryptocurrencies. Bears will boast that the best possible days are in the rear view mirror. Yet the bulls argue that Coinbase is an innovator that is much more than just a crypto brokerage in a race to the ground on the commission front.
Coinbase can weather the storm as revenue takes a break
Although I said Coinbase was likely to face margin pressure from its rivals, I commended the company for its brand.
Yes, there are tons of competitors, but how many are as established as Coinbase? I’d say it’s far better to pay a little more for the comfort of knowing you’re in good hands with a big league platform that doesn’t go anywhere overnight.
Yet, amid fintech disruption, there will be more trusted names (perhaps even a big tech company) that could enter the space over the next decade. Luckily, when such a rival gets into cryptocurrency trading, Coinbase can already focus on the next big thing. As a blockchain infrastructure game, the long-term case for Coinbase ownership makes more sense.
ARK Invest’s Cathie Wood, who is still bullish on COIN stocks, seems focused on the more distant future than the near-term future or past.
Yes, there are headwinds ahead, but the company is making the right investments to lay the foundation for the future of crypto.
Coinbase NFT is coming soon, and it could be a big deal
NFTs (Non-Fungible Tokens) may or may not be a fad. Either way, the launch of Coinbase’s NFT marketplace could propel these digital assets back to the forefront.
Although it is difficult to gauge the size of the NFT market, it is an underrated corner of the blockchain market where Coinbase can dominate. Currently, OpenSea is a go-to NFT marketplace where enthusiasts and investors can purchase intriguing digital assets with cryptocurrencies like Ethereum.
The real opportunity in NFTs is if Coinbase can leverage its established brand and market its marketplace to consumers who might not have otherwise considered buying the unique digital entities.
It can be said that NFTs remain in their infancy. They could be a fad or something that could become increasingly popular once we are propelled into the digital worlds of tomorrow (think “metaverse”).
Coinbase Stock: Are Bulls or Bears More Likely to Win?
As Chanos shorts COIN stocks, Wood may buy the dip. She is convinced of the future of the company, which seeks to skate where the puck goes next. The stock is down about 55% from its all-time high, just below $350 per share. So there may be real value to claim in the $34 billion crypto infrastructure company.
With so much damage already done, I’m more inclined to part ways with Cathie Wood. While I don’t think Wood’s $1 million Bitcoin price target will be reached in the next decade, Coinbase has the wherewithal to become the next big thing in the crypto world.
Of course, there will be huge ups and downs as the crypto fluctuates. However, Coinbase seems focused on where the puck should go next. With the keys to the potentially lucrative NFT market, there are reasons to give the company the benefit of the doubt, even if it runs into some headwinds.
In short, I think bears and bulls both have strong cases. In the long run, however, I think it’s the bull’s case that will shine through.
The Taking of Wall Street
According to TipRanks analyst rating consensus, COIN stock is looking like a Moderate Buy. Out of 16 analyst ratings, there are 12 buy recommendations, two hold recommendations and two sell recommendations.
Coinbase’s average price target is $296.53, implying an upside of 101.32%. Analyst price targets range from a low of $135 per share to a high of $500.
Coinbase Stock Basics
For Coinbase, the field of possibilities is extreme. Coinbase is a big innovator in the crypto scene, and it’s arguably a better bet than Bitcoin itself.
On the other hand, earnings look set to blow as comparables become harder to beat. Additionally, a cyclical downturn or renewed boom in crypto markets remains a wild card that could send COIN stocks flying in either direction.
For now, I’m on the side of the optimistic Cathie Wood. While her track record has been less than stellar lately, she does make some good points about the company’s focus on the next frontier in the crypto and blockchain space. That alone, I think, justifies a higher multiple; even Coinbase is facing a profit “hangover” after a magnificent year that will be hard to beat.
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