Cryptocurrency has become an extremely popular asset in the last couple of years, primarily for its decentralized and somewhat anonymous capabilities. However, cryptocurrency has faced a massive problem. That problem was accessibility. A few cryptocurrency exchanges have appeared in the past but never gained mass adoption, until now.
Coinbase (NASDAQ: COIN) is one of the leading cryptocurrency exchanges that has revolutionized the process of individuals buying, selling, or holding their favorite cryptos. After a substantial decline in Coinbase stock since its IPO in April, it has more recently begun to climb back up, already up 30% in the past month alone. To many, Coinbase stock was severely undervalued, but fears of crypto volatility have kept investors on edge. However, since then the sentiment is beginning to become positive after a rally in the broad cryptocurrency markets.
How is Coinbase currently performing?
In the second quarter of this year, Coinbase generated over $2.2 billion in revenue, which represented a mind-boggling increase of over 1,000% year-over-year. This was because Coinbase had only generated $186 million in the same time last year prior to their IPO.
Coinbase also demonstrated immense growth in its Verified Users, totaling 68 million. However, more impressively, a 44% increase from the previous quarter in Monthly Transacting Users (MTUs), totaling 8.8 million. Alongside all of these users, institutions became prominent, as they now total 9,000 clients.
These user counts can fluctuate with different crypto market conditions, however, over the long term, investors are expecting a steady inflow of users as more and more people gain exposure to cryptocurrency. Whether it’s individuals or institutions, Coinbase generates revenue from transaction fees, subscriptions, and even cryptocurrency itself. This contributes to a well-diversified revenue portfolio in the crypto industry, that still performs well under unfavorable market conditions.
Why It’s Important
What makes Coinbase an innovator in the industry is the incredibly simple process of participating in all things crypto. Users can also utilize cryptocurrency for payments on debit cards while earning cashback rewards. All of this and more is what makes Coinbase a popular and favored cryptocurrency exchange, but also technically a payment provider as they offer much more than just an exchange service.
Just yesterday, Goliath payment provider Mastercard announced they will be teaming up with Bakkt to integrate cryptocurrency with their debit cards alongside developing a crypto rewards platform. PayPal have also invested heavy capital into the crypto space allowing users to buy, sell and pay with certain cryptocurrencies. With Coinbase at the forefront of the emerging cryptocurrency economy, their expertise and ingenuity will be an attractive proposition for payment solution companies around the world.
Not only is Coinbase gaining continuous traction through word-of-mouth from its existing users, but the company has also inked deals with organizations like the NBA to spread awareness about the crypto economy, of which Coinbase is proudly a key pioneer. Facebook also recently collaborated with Coinbase to operate a digital wallet called Novi which will integrate into the Facebook ecosystems.
Cryptocurrencies are here to stay. As a result, this makes many individuals and institutions wonder how to take advantage of it. Luckily, it’s never been easier and because of this, Coinbase stock is beginning to make a significant name for itself especially in the United States.
Wallstreet giant sees 15% upside in Coinbase stock
Coinbase stock remains highly respected on Wallstreet with the average valuation highlighting a neat 13% upside from the current trading price. More recently, JPMorgan analyst Kenneth Worthington raised JP Morgan’s price target on Coinbase to $375 whilst maintaining an Overweight rating on COIN stock.
Worthington highlighted in a research note that Coinbase has had a strong August and September in regards to trading levels. This is despite them dropping below Q2 levels which were during the peak of the crypto currency craze. The analysts target represents a 15.3% upside despite the stock recently gaining momentum in recent months.
Another Wallstreet analyst, Peter Christiansen from Citi initiated coverage with a $415 price target valuation. The analyst noted Coinbase stock offers unique exposure to increased “retail and institutional cryptocurrency adoption”. Furthermore, Christiansen sees potential future opportunities for Coinbase stock to benefit from expansion into cold wallet storage and NFT. The analysts target on Coinbase stock represents a 27.6% upside from the current trading price. Overall, the recent coverage on Coinbase has been relatively bullish with the average valuation remaining considerably above its bid/ask price.
While many people struggle to find a way to gain exposure to cryptocurrency, Coinbase is providing one of the most simple and time efficient ways to do so. This is exactly what early investors and adopters of crypto have been needing, which is why we see such compelling growth each quarter.
Coinbase will likely continue on its path to introducing more people and institutions into the crypto economy. This of course will become of mutual benefit for both shareholders of Coinbase stock and consumers over the long term as the companies revenue model is highly correlated with new user activity and interest. Overall, Coinbase makes a traditionally difficult industry easy to access. There’s no doubt Coinbase will be around for years to come and will aim to use its position in the crypto economy to further integrate institutions and businesses through its platform.
The information above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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