Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Is Coinbase Stock A Buy After Its Recent 80% Plunge?

By Investing.com (Haris Anwar/Investing.com)Stock MarketsMay 19, 2022 06:38
uk.investing.com/analysis/is-coinbase-stock-a-buy-after-its-recent-80-plunge-200519239
Is Coinbase Stock A Buy After Its Recent 80% Plunge?
By Investing.com (Haris Anwar/Investing.com)   |  May 19, 2022 06:38
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • Coinbase is in a solid position to weather a bear market on the back of its balance-sheet strength
  • The exchange is trying to diversify its business and reduce its reliance on trading revenue
  • The majority of analysts rate COIN as a buy
  • If you’re interested in upgrading your search for new investing ideas, check out InvestingPro+

Coinbase Global (NASDAQ:COIN) has been on a slippery slope this year. Shares of the largest cryptocurrency exchange in the US have lost more than 80% of their value since hitting a record high in November amid a widespread sell-off in crypto coins and other speculative assets. COIN closed Wednesday at $63.03.

COIN Weekly Chart
COIN Weekly Chart

After this sharp decline, investors wonder if this is the right time to start building exposure in the first major cryptocurrency-focused company to go public. Coinbase’s latest earnings report offers some clues.

Last week, the San Francisco-based company reported earnings that missed analysts’ forecast as trading volume declined. First-quarter revenue dropped 27% to $1.17 billion, while the company also reported a net loss of $430 million.

Coinbase’s results reflect the general sentiment in the crypto market. Since its all-time high in November, Bitcoin is down more than 50%, pushing many retail traders to stay on the sidelines. Coinbase earns the bulk of its revenue from trading fees.

The sell-off in crypto assets accelerated this month after the collapse of TerraUSD and its sister token LUNA, which sent a ripple effect across the industry.

Nonetheless, in a letter to investors, Coinbase said it is in a solid position to weather a bear market on the back of its balance-sheet strength. During a prolonged bear market, the company will continue to aim to manage its full-year potential adjusted EBITDA losses to about $500 million.

The letter added:

“We believe these market conditions are not permanent, and we remain focused on the long-term.”

Furthermore, the company also told investors it focuses on the next generation of crypto opportunities beyond trading.

Trading At A Distress Level

However, this positive outlook by the management doesn’t hide the fact that there may be more pain ahead. COIN announced yesterday that it would slow hiring and reevaluate its headcount, reversing earlier plans to triple its workforce in 2022.

For some analysts, COIN’s 80% plunge shows that the market is already pricing in a prolonged weak trading environment, and the stock is offering a buying opportunity.

These sentiments are also reflected in an Investing.com poll of analysts in which the majority of forecasters recommend buying the stock. Their consensus price target implies about 178% upside potential for the next 12 months.

COIN Consensus Estimates
COIN Consensus Estimates

Source: Investing.com

In a recent note, Oppenheimer’s Owen Lau said that the market has gone too bearish on Coinbase, which appears to be trading at a distress level.

He added that the company’s fundamentals remain substantial and long-term crypto adoption remains intact, providing an attractive entry point for long-term investors.

Lau rates COIN shares an Outperform, with a 12-month price target of $197.

Bank of America, in a note this week, also reiterated Coinbase as a buy, saying it’s sticking with the stock after its latest earnings report. Its note said:

“We continue to think COIN remains well-positioned to roll out new products that will generate top-line growth and diversify revenues.”

Coinbase is trying to diversify its business and reduce its reliance on trading revenue which are likely to remain volatile. According to a report in Bloomberg, its staking product that allows users to put their coins into special yield-earning accounts is gaining traction.

Coinbase has also been working on launching crypto derivatives. This month, it opened its new marketplace for nonfungible tokens (NFTS)—essentially, digital art connected to blockchain—to all users.

Bottom Line

COIN’s dramatic plunge this year has opened a window for investors to take a position in the largest crypto exchange in the US. That said, COIN isn’t a stock that suits investors with a short-term horizon due to the market’s highly volatile nature.

As crypto-assets take a plunge in the current market rout, COIN will continue to face the impact on its trading volumes, shedding its earnings by extension.

Looking to get up to speed on your next idea? With InvestingPro+ you can find

  • Any company’s financials for the last 10 years
  • Financial health scores for profitability, growth, and more
  • A fair value calculated from dozens of financial models
  • Quick comparison to the company’s peers
  • Fundamental and performance charts

And a lot more. Get all the key data fast so you can make an informed decision, with InvestingPro+. Learn More »

Is Coinbase Stock A Buy After Its Recent 80% Plunge?
 

Related Articles

Is Coinbase Stock A Buy After Its Recent 80% Plunge?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
som sithy
som sithy May 19, 2022 12:38
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hello
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email