Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

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

By Investing.com (Haris Anwar/Investing.com)Stock MarketsMay 19, 2022 09:31AM ET
www.investing.com/analysis/is-coinbase-stock-a-buy-after-its-recent-80-plunge-200624506
Is Coinbase Stock A Buy After Its Recent 80% Plunge?
By Investing.com (Haris Anwar/Investing.com)   |  May 19, 2022 09:31AM ET
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 other 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, don’t trash it.

  •           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. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. 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 (12)
sa ran
sa ran May 20, 2022 2:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So we are supposed believe their future change in unproven plans will be fruitful when their current business went from being profitable to burning that touted cash. "...shedding its earnings by extension." Don't jump the gun there, it now has losses.
Son Yay
Son Yay May 19, 2022 2:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bubble. Can drop again.
بركات الزكري
بركات الزكري May 19, 2022 2:08PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I have not been
John Dislias
HephaestusTrades May 19, 2022 1:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The crypto prices are decreasing the revenues pf coinbase is going to be decreaing as well .
Guven Buyukpolat
Guven Buyukpolat May 19, 2022 12:51PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
title should not be after 80 percent plunge title should be after 70 percent up. it came from $40 in 3 weeks whoever bought under $50 when those take profit you will plunge .
mg bishton
mg bishton May 19, 2022 12:29PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Shouldn’t you be burying the dead before implying that this is a buy. I mean have you no humanity?
Joseph Obrzut
jzut May 19, 2022 11:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Not with a TWELVE FOOT pole.
Thomas Chergi
Thomas Chergi May 19, 2022 6:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Buffet says he wouldnt give $25 for all of the BITCOINS in the world. Is he wrong?
Robert Cox
Robert Cox May 19, 2022 6:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Nope
Bonney Lake
Bonney Lake May 19, 2022 6:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
he won't invest on something he don't understand.
Sidney Glover
Sidney Glover May 19, 2022 6:18AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
most religions prohibit usury and gambling I take it that Anwar and Mohd are not practicing their faith
Sidney Glover
Sidney Glover May 19, 2022 6:15AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Andy and Anwar sound like shills. where is the detail of the great balance sheet? if business has such great future why go into yield mining which is really a ponzi scheme? why go into another ponzi scheme aka NFTs? game tokens are not investment grade. IRS is coming babies.
 
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
Continue with Google
or
Sign up with Email