The article we will write today is about Coinbase stocks. It is the largest and the most popular crypto platform in the US. It was founded by Brian Armstrong. It is very easy place to buy and sell cryptocurrencies. Coinbase has more than 56 Million users and their quarterly volume traded is nearly $335B. They have $223 Billion worth of assets on the platform. They have more than 1700 employees. Nasdaq assisted a reference point of $250 for each share on April 13 and it gives Coinbase a value of $65 Billion. Coinbase stock ’s potential valuation compared to CBOE and other groups, is the biggest one.
Its price went over $483 Million to $1.14 Billion in one year. Coinbase’s operating profits went from -$45 Million to $409 Million. There are two big forms of revenue from Coinbase. The big form of revenue is transactional revenue. You buy Bitcoin and sell it. It is transactional revenue. Subscription and service revenue is about borrowing, saving, lending, storing. Now growth is coming to that transactional side.
Revenue ended at $1.14 Billion at the end of the 2020. The other revenue (services) was $136 Million. However, their revenue went from $1.14 Billion to $1.8 Billion, and it happened in the first quarter of the 2021. On Friday, May 7, 2021 it hit the $250 valuation. Therefore, Coinbase makes the majority of the revenue from trading.
The founder of the company Brian Armstrong sold his 70% A shares. It is approximately $300 million but he has a lot of B shares, so it means he sold %2 of his Coinbase stock after the company went public. There were a lot of insiders who sold their shares. The company is still undervalued. You have to decide what you want to do. But it is undervalued and can go higher. There is no investment without a risk.
If you look at the Coinbase behaviors, you can see that it is correlated to the Bitcoin prices because every time somebody buys or sells Bitcoin, Coinbase makes a profit which is a percentage about %1.5 for every transaction. If the Bitcoin prices come down, their fee goes down by definition so you must know that they are correlated with the exceptional prices of Bitcoin. As I mentioned, if a bitcoin crash happens, Coinbase stock also will suffer from that.
How Does Coinbase Make Money?
Coinbase is the largest cryptocurrency exchange in the US and Binance in the world. It has more than 50 cryptocurrencies for people to trade them and the most popular one is Bitcoin. Ethereum can also triple in 2021. Coinbase gets several percentage points from transactions and it is the main way for companies to make money. Approximately %90 of Coinbase stock ’s revenue comes from transaction fees.
Therefore, as I mentioned, Bitcoin is the main cryptocurrency in the market, and it has declined nearly 15% after Coinbase went public. Coinbase revenues are sensitive and related to cryptocurrency prices because monthly transaction users on Coinbase are very important for a company to make money. If crypto prices especially Bitcoin trend lower this could affect Coinbase stock too.
Is It Better to Buy Than Bitcoin?
If Bitcoin was to reach the market cap of gold which has a market cap of $12 Trillion it means growth will be around 10x for Bitcoin. It could be but for Coinbase stock to 10x, it would have the market cap closer to Tesla which is $600 Billion. According to some analyses, Bitcoin to 10x is more possible than Coinbase stock to 10x.
This article is for information purposes only. Do not take any of this content as a investment strategy. Do your own research and make your own decisions. Do not forget that there is no investment without a risk.