Coinbase (NASDAQ: COIN) is an American cryptocurrency exchange platform — essentially, it’s a very user-friendly way to buy and sell crypto using fiat currency. On January 28, 2021, the cryptocurrency exchange made an official announcement about its intention to go public. The SEC published Coinbase’s Form S-1 on February 25, outlining plans to become publicly traded through a direct listing rather than a traditional IPO.
Coinbase directly listed on the Nasdaq exchange this week, but what does this company do, and should I buy?
When can I buy Coinbase stock?
You can buy Coinbase stock on the Nasdaq exchange as of Wednesday, April 14. Coinbase is listed under the ticker symbol ‘COIN’.
Why should I buy Coinbase shares?
Since its humble beginnings in 2012, Coinbase has managed to capture a large portion of the cryptocurrency market, making it the largest cryptocurrency exchange in the U.S. With cryptocurrency becoming more popular by the day, Coinbase is only going to grow.
The company is also well-positioned to capitalize on the growing popularity of cryptocurrencies among retail investors, many of whom would prefer not to have to buy and hold specific tokens. Coinbase could be seen as an easy and somewhat less speculative way to invest indirectly into this burgeoning sector. It will be the first U.S. company of its kind to go public and will likely be among the most notable tech listings this year.
Its financials are in a good position too:
- Q1 2021 revenue increased to $1.8 billion, up from the $190.6 million in the same period in 2020.
- Net income climbed to between $730 million and $800 million, up from the $31.9 million a year ago.
- As of the end of Q1, it had 56 million verified users on its platform, compared to 34 million the previous year.
- Its trading volume reached $335 billion in Q1, up from the $30 billion worth of trades in the first quarter of 2020.
Risks to investing in Coinbase!
There are no ‘sure things’ in investing. Coinbase looks awfully appealing and has all the traits of a strong growth stock, but let’s look at the risks to investing:
- Coinbase’s private valuation of $68 billion has it priced at 60X 2020 revenue. With expectations that it could go public at closer to $100 billion, this will be a very expensive investment.
- The cryptocurrency market is a fickle one, with price fluctuations common and often disruptive of those reliant on it. For example, Bitcoin is up more than 700% in the past 12 months, from $6,871. But that price was actually down 72% in just 18 months from previous highs of under $20,000 per token.
- Cryptocurrency is still a young and underregulated market, which entails a lot of risk. In India, digital currency has been banned altogether under threat of hefty fines. However unlikely, this could spread to other countries.
Read more about Coinbase:
- How Much Will Coinbase Stock Be?
- When Is Coinbase Going Public?
- Unraveling Coinbase’s Whopping $100 Billion Direct Listing
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.