After 80% Fall, Is Coinbase Stock A Steal Or A Value Trap?

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cryptocurrency exchange coinbase stock (NASDAQNDAQ
:COIN) is down nearly 80% year over year in 2022 and remains about 85% below the all-time high seen in November 2021, trading at around $75 per share. The crypto exchange has lowered the broader S&P 500, down nearly 22%. With rates increasing at a faster pace than the Fed has projected to fight rising inflation, investors are exiting riskier, non-yielding assets like cryptocurrencies. For Perspective, Belvedere Cryptocurrency BitcoinB T c
It is now down 74% from its record high in November, trading at around $19,000 as of Sunday. Lower cryptocurrency prices usually translate into lower transaction volumes and affect active user numbers for exchanges such as Coinbase. Growth stocks in general have also taken a beating amid concerns about a possible slowdown in the US. The downcycle is reflecting on Coinbase’s finances, over Q1 2022, the most recently reported quarter, with the company trading retail monthly. saw users fall 20% year-over-year to 9.2 million, with total trading volume down 45% to $309 billion. Things are likely to get worse in the second quarter as the full impact of the decline in cryptocurrencies is being felt.

So, is it time to buy Coinbase stock after this big sell-off? Although it is difficult to enter a stock amid market volatility, there are a few factors for potential investors to consider. This is clearly likely to remain tough for the company in the near to medium term, as crypto prices may remain depressed through the Fed’s monetary tightening, which will certainly further affect activity on the company’s platform. That said, Coinbase has enough liquidity to exit the downcycle, with its cash and cash equivalents standing at $6.1 billion at the end of Q1 2022. It is also very likely that the fall in crypto prices will eventually reverse. Bitcoin is seen as one of the most innovative technologies of our time, and as an asset it has shown resilience in the past, coming back strong after major selloffs. While it is difficult to say how long the recovery will take, Coinbase previously indicated that the crypto cycle typically lasts two to four years. Coinbase should be a huge beneficiary as things eventually get better, given that it is the market leader in the cryptocurrency space. Coinbase has also shown the potential for extraordinary profits during good times. In 2021, the company’s total profit stood at $3.6 billion on revenue of only $7.4 billion. These factors can make a stock’s risk-to-reward position attractive, versus historical levels.

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We value Coinbase stock at $150 per share, which is well ahead of its current market price of $55 per share. View our analysis coinbase valuation: expensive or cheap? For more information on Coinbase’s valuation. Also, check out our analysis coinbase revenue, How does Coin make money? For details on the company’s major revenue streams and how they trend.

Stock prices across sectors have fallen sharply in recent months and we are now in a bear market for the first time since March 2020, when the COVID-19 outbreak triggered a market crash. We capture key trends in the Dow during and after major market crashes in our interactive dashboard analysis.market crash comparison,

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