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Coinbase Stock: Long-Term Play for Investors

Stock MarketsSep 01, 2021 06:30PM ET
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© Reuters. Coinbase Stock: Long-Term Play for Investors

I am bullish on Coinbase Global , Inc. (NASDAQ:COIN), due to its attractive valuation and strong long-term growth potential.

Coinbase is a popular cryptocurrency exchange platform based out of San Francisco, California. It offers users the ability to buy and sell Bitcoin, Ethereum, and Litecoin. In addition to its trading platform, Coinbase also offers numerous ancillary services, including cybersecurity storage services.

Coinbase was started in 2012 with the goal of making it easy for anyone to get into Bitcoin by working as a wallet service provider. The company has raised millions of dollars in venture capital from various investors. (See COIN stock charts on TipRanks)

Strengths

Coinbase is a secure, easy-to-use digital wallet that allows you to send and receive cryptocurrencies. Coinbase also provides an API, making it one of the most popular Bitcoin platforms on Earth.

What makes Coinbase stand out from other competitors in the industry are its security measures, ease of use, regulatory compliance, legal status, and popularity among customers worldwide.

Recent Results

Overall, the second quarter was strong for Coinbase. The retail monthly transacting user (MTU) count grew to 8.8 million, a 44% increase quarter-over-quarter. Verified users overall came in at 68 million.

Coinbase also has 9,000 institutions involved on the platform, and 160,000 partners using COIN tools to interact with customers.

Net revenue was $2 billion, which included $1.9 billion in transaction revenue and more than $100 million in subscription and service fees. Coinbase’s net income was $1.6 billion, while adjusted EBITDA was over $1.1 billion.

Coinbase's forward EV/EBITDA multiple is 19.3, and its forward EV/Revenues multiple is 8.5. For a company with $4.4 billion in cash on hand, network and early mover advantages, and impressive long-term growth potential in a cutting-edge sector, Coinbase certainly looks reasonably priced.

Wall Street’s Take

From Wall Street analysts, COIN comes in as a Moderate Buy, based on 11 Buy ratings, three Hold ratings, and one Sell rating in the past three months. Additionally, the average COIN price target of $355.54 puts the upside potential at strong 31.7%.

Summary and Conclusions

Coinbase had a strong second quarter, showing that its profitability can continue to grow, even during a period where overall cryptocurrency prices were on the decline.

Furthermore, the company continued to diversify away from an overreliance on Ethereum and Bitcoin, and also grew its institutional ancillary services business, strengthening its profitability and moat.

Coinbase is likely to continue generating strong growth over the long-term, though results will likely be choppy in the short-term. Its attractive valuation and bullish Wall Street sentiment combine to make it a potentially opportunistic time to buy the stock.

Disclosure: On the date of publication, Samuel Smith had a long position in COIN.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Coinbase Stock: Long-Term Play for Investors
 

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