The total value of all cryptocurrencies is at an all-time high; over $2.6 trillion compared to $2.4 trillion last quarter. Adoption of crypto as a whole has grown, with countries like El Salvador making it legal tender and businesses incorporating it; Twitter and Patreon have announced tipping in cryptocurrencies for creators on their platforms. And not to forget Shiba Inu and Dogecoin continue to execute on plans of world domination — joking-ish. But what’s in store for Coinbase (NASDAQ: COIN)?
The Coinbase Story
Brian Armstrong is the CEO and Co-Founder of Coinbase, setting up shop in 2012. Nine years later, it has grown into the world’s largest international cryptocurrency exchange, worth $87 billion and boasting over 68 million verified users.
As an exchange, the majority of its revenue comes from user transactions. Active traders are contributing most to revenue, but it operates for retail investors (including educational videos) and institutional investor services. It offers a premium subscription, Coinbase Pro for enthusiasts and professional traders, and it has now added staking to the platform which allows customers to earn a yield from their holdings/coins.
Finally, its venture capital (VC) arm Coinbase Ventures invests in new opportunities like NFTs (non-fungible tokens) and even the latest phenomenon, the Metaverse.
When does Coinbase report its Q3 earnings?
Coinbase reports earnings on Tuesday, November 9, 2021. You can listen in using the link here, or there should be a presentation available on the Coinbase Investor Relations page after it takes place.
Competition is stiff — there are 425 exchanges worldwide, including Coinbase. However, it is the largest and perhaps most well-known. For Top Finance apps in the U.S., it flaunts the Number 2, and Number 3 position in the App Store and the Play Store, respectively. That’s ahead of Robinhood, Paypal (NASDAQ: PYPL), WeBull, Wells Fargo, which provides traditional banking and investment services. Its main competitor, Binance, only holds the 21st position and 25th position in comparison.
It has brand positioning advantages versus other competitors, which has allowed it to attract high-profile clients including SpaceX, Tesla (NASDAQ: TSLA), Third Point LLC, WisdomTree Investments.
COO Emilie Choi recently stated:
“More than 10% of the largest hedge funds by assets under custody are now using Coinbase in some way”
Since its inception, the platform has never incurred a loss due to a cyberattack, according to CFO Alesia Haas which reinforces the trust in the brand.
Regulation. Currently, these markets are unregulated, and several cases are ongoing to distinguish between securities, commodities, and “utility-based” tokens. Coinbase uses a framework for determining utility versus securities but a crackdown could come on some tokens Coinbase trades, and the effects of that are unknown. The entire business is built on trading, but also the success of crypto, so as a long or short-term investment, Coinbase isn’t for the faint of heart.
A massive beat or a massive miss are both on the cards. Traction in the space really ramped in Q4 2020, so year-on-year numbers should be great, but other than that, it’s difficult to say.
Robinhood recently missed earnings due to a slowdown in crypto trading, in particular for the beloved Dogecoin. Whether that slowdown translates to Coinbase earnings is to be seen. The rise and fall, and rise again of crypto might look like a negative, but when there’s pandemonium, it leads to high volume trading, and that’s really the sweet spot for Coinbase revenues and profits.
Financial Writer at MyWallSt
David's favorite stock is Google. He's a daily user of its YouTube platform, where you can learn or find something brand new at the touch of a button. He believes the company will continue to grow for many years to come.