Solid Financials Make Coinbase a Great Buy
Coinbase Global (NASDAQ:COIN), the cryptocurrency giant, enjoys an early-mover advantage in the industry. The company has consistently attracted new users with unique features and assets. After reporting strong fourth-quarter results, COIN stock soared, but soon hit an all-time low. The results weren’t disappointing, but the dip in the stock could be due to macroeconomic situations and investor sentiment.
COIN stock was once a hot pick, trading close to $360 in November 2021. Four months since then, it is down to $189.
The stock has been on a downward trend since December and could be close to a rebound now. With that in mind, let’s take a look at why I think COIN stock is a good buy.
Booming Business
For the fourth quarter, Coinbase reported revenue of $2.5 billion, which is a massive rise from $585.1 million in the previous year. The net income peaked at $840.2 million from $176.8 million in 2020. This is nothing but impressive and shows how well the company is handling its business. In the final quarter of 2021, Coinbase reported GAAP earnings per share of $3.90.
The numbers are certainly impressive for the company and the high trading volume has helped its bottom line. With a constant rise in the number of crypto assets on the platform, Coinbase is making sure that it offers the right assets to different types of investors. Its market share of trading volume has also increased and it generated $500 million in service revenue in 2021. This shows that the company is diversifying its business well.
The Market Is Expanding
If the crypto industry continues to expand, Coinbase will grow its presence and it could become the go-to platform for crypto investors. As of December 2021, Coinbase has a $10.7 million operating cash flow and $1 billion in crypto, which will give it enough liquidity to invest in other platforms. The good news is that users are adopting the platform and enjoying it.
Coinbase expects the first quarter retail monthly transacting users to decline due to the dip in crypto asset prices and volatility. It expects a total trading volume of $200 billion and lower subscription and service revenues.
The massive rise in net revenue and profit from 2020 to 2021 is impressive and it is not easy to achieve. Coinbase has also more than doubled the assets on its platform over the year. This is a sign that it is taking all the essential steps to attract users to the platform and provide them with several different assets to choose from.
As the crypto industry expands, Coinbase’s business is also growing and the numbers are proof. If Coinbase continues to grow the monthly transacting users, it will be able to report strong numbers consistently.
COIN Stock Could Soar
Chris Allen, a Compass Point analyst, has a price target of $200 for the stock. Further, Needham analyst John Todaro has a price target of $360 with a Buy rating. The analyst cites the company’s solid trading volumes and retail, which continue to remain robust. Joseph Vafi, a Canaccord analyst has a price target of $275 on the stock with a Buy rating.
At $189, the stock looks cheap. The company has a market capitalization of $49.6 billion and has reported revenue of $3.6 billion in the year. With solid revenue growth and impressive fundamentals, Coinbase is a great addition to your portfolio. There is a lot working in favor of the company and this could take the stock much higher in the coming months. I recommend to buy COIN stock in the dip.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
