COIN

What is Coinbase (COIN)?

Coinbase Global, Inc. is a gateway to the world of crypto for 89 million users globally and counting. 

This American cryptocurrency exchange facilitates the secure purchase, sale, transfer, and storage of digital currencies for individuals and institutions.

Coinbase’s mission is “to create an open financial system for the world and to be the leading global brand for helping people convert digital currency into and out of their local currency.”

The company was founded in 2012 by former Goldman Sachs trader Fred Ehrsam and former Airbnb engineer Brian Armstrong. Interestingly, Coinbase has no physical offices as all employees work remotely.

How does Coinbase make money? 

Coinbase earns revenue from transactions, subscriptions and services. The majority of the company’s revenue comes from individual or institutional crypto transaction fees. 

Subscription and service revenue comes from card transaction fees, custodial fees, course promotion referral fees, interest income, and API fees. Coinbase also profits from their venture investments.

Is Coinbase profitable? 

Yes, Coinbase is profitable. 

Over the past three years, Coinbase’s revenue has grown from US$534m in FY2019 to US1.2b in FY2020 to US$7.8b in FY2021. That’s a whopping compound annual growth rate (CAGR) of 283%!

The company’s operating income in FY2021 was a touch over US$3.1b while free cash flow was an extremely healthy US$10.6b.

Is COIN a growth or dividend stock?

Coinbase went public in April 2021 and any public financial data on the company only goes back three years. 

While Coinbase’s financial statements show revenue’s CAGR to be up 283% from FY2019 through to FY2021, it’s yet to be seen if the company can keep this up. As shown by the huge ups and downs of Bitcoin, the cryptocurrency market can be highly cyclical.

COIN does not offer shareholders dividends at this time.

How does Coinbase compare to Binance?

Coinbase is generally thought of as a crypto platform for beginners, even though it offers Coinbase Pro for experienced traders and Coinbase Prime for institutional investors. 

Binance is squarely targeted at advanced traders.

Coinbase supports 139 cryptocurrencies while Binance supports significantly more at over 600 cryptocurrencies.

Is COIN a good way to get exposure to crypto?

Yes, in a roundabout way. 

To be clear, you’re not purchasing any cryptocurrency by purchasing COIN stock. You’re actually investing in the possible future success of one of the most well-known U.S. based cryptocurrency exchanges in the world.

Is COIN a good investment? 

Cryptocurrencies such as Bitcoin, Ethereum and Solana are becoming increasingly popular. In fact, many crypto bulls believe the technology may even replace cash in the near future.

While nobody has a crystal ball, some investors believe COIN to be a good investment if you’re willing to buy and hold it for the long term. 

Just keep in mind, since it went public in April 2021, the COIN stock price has plummeted by 50% from a high of US$429.54 to a recent low of US$150.12.