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Category: Coinbase (COIN)
Date: 17 May 2021 Stock price of Coinbase: $258.37 Market Capital of Coinbase (COIN): $51.5 billion We take a look at the first set of financial results published by Coinbase (COIN) as a listed company. Coinbase operates one of the world's largest cryptocurrency exchange platforms
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Despite the challenges of the COVID-19 global pandemic, we were still able to achieve a strong start to the year "
More About Coinbase (COIN)
Coinbase is building the cryptoeconomy – a more fair, accessible, efficient, and transparent financial system enabled by crypto. The company started in 2012 with the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin. Today, we offer a trusted and easy-to-use platform for accessing the broader cryptoeconomy.
Overview of Coinbase (COIN) 1st quarter 2021 earnings report
1st quarter 2021 earnings highlights
- Total revenue was $1.8 billion for the first quarter of 2021.
- Net revenue was $1.6 billion, of which $1.5 billion was transaction revenue and $56.4 million was subscription and services revenue.
- Q1 retail transaction revenue was $1.5 billion and marked our first quarter above $1.0 billion. Strength in the quarter was driven by both higher monthly transacting users (MTU) and elevated trading volumes per MTU compared to prior periods as a result of strong crypto market conditions. In addition, retail transaction revenues benefited from the addition of seven new supported assets for trading throughout Q1.
- Weighted average retail transaction fee rates were lower in Q1’21 compared to full-year 2020 levels due to higher trading volumes among Coinbase Pro users which provides a tiered fee structure. There were no changes to our transaction fee rates in Q1 and consumers continue to see value in the security, compliance, and ease-of-use that Coinbase offers. Institutional transaction revenue was $85.4 million in Q1, driven by growth in the number of institutional trading customers as well as higher volume traded per institutional customer.
- Institutional transaction fee rates, on average, were lower in Q1 compared to full-year 2020 levels as a result of higher volume transactions that generate lower fees according to our tiered fee structure.
Coinbase (COIN) management commentary 1st quarter 2021 earnings report
Fellow shareholders, Welcome to our first shareholder letter following our direct listing on Nasdaq on April 14, 2021. In this letter, we will discuss our quarterly financial performance, provide product updates, share insights on the rapidly evolving crypto landscape, and provide our financial outlook. Our strong Q1 2021 results reflect the strength of the crypto price cycle we entered in Q4 2020. We saw many crypto assets reach all time high prices, high levels of volatility, and increased interest across the entire cryptoeconomy. Crypto market capitalization reached nearly $2 trillion at the end of Q1 2021 compared to $782 billion at the end of Q4 2020. By the end of Q1, the price of Bitcoin had nearly doubled to approximately $59,000 compared to the end of 2020, and the price of Ethereum more than doubled during this same period to approximately $1,900. This market environment drove strong engagement with the Coinbase platform, reflected in retail, institutional and ecosystem partner growth across all key metrics including our Verified Users, retail Monthly Transacting Users (MTUs), Trading Volume, and Assets on Platform. At the same time, we continued to see our growth flywheel in action. First, more participants than ever entered the cryptoeconomy in Q1.
We now have over 56 million Verified Users, including more than 8,000 institutions, and over 134,000 ecosystem partners on our platform. Retail MTUs grew to 6.1 million in Q1 2021, more than double compared to Q4 2020. Second, we expanded the breadth and depth of the assets that we support. We added support for 7 new assets to trade and 13 new assets to custody. Adding support for new assets is an important driver of growth of Trading Volume and Assets on Platform. Lastly, we continued to launch innovative products that attracted new customers and deepened relationships with existing ones.
For example, in Q1 we acquired Bison Trails--now part of our Coinbase Cloud offering--that will allow companies to send and store crypto, accept crypto payments, and build their businesses with crypto-native infrastructure. Despite our strong Q1 results, the rapid expansion of the cryptoeconomy also creates challenges for Coinbase. Competition is increasing as new market entrants join the cryptoeconomy every month. Our competitors are supporting certain crypto assets that are experiencing large trading volume and growth in market capitalization that we do not currently support, as well as offering new products and services that we do not offer. We welcome these challenges as they indicate that the market we serve is growing rapidly, but we also have to continue to move quickly to address them, and that inspires us towards action and growth.
We now have over 56 million Verified Users, including more than 8,000 institutions, and over 134,000 ecosystem partners on our platform. Retail MTUs grew to 6.1 million in Q1 2021, more than double compared to Q4 2020. Second, we expanded the breadth and depth of the assets that we support. We added support for 7 new assets to trade and 13 new assets to custody. Adding support for new assets is an important driver of growth of Trading Volume and Assets on Platform. Lastly, we continued to launch innovative products that attracted new customers and deepened relationships with existing ones.
For example, in Q1 we acquired Bison Trails--now part of our Coinbase Cloud offering--that will allow companies to send and store crypto, accept crypto payments, and build their businesses with crypto-native infrastructure. Despite our strong Q1 results, the rapid expansion of the cryptoeconomy also creates challenges for Coinbase. Competition is increasing as new market entrants join the cryptoeconomy every month. Our competitors are supporting certain crypto assets that are experiencing large trading volume and growth in market capitalization that we do not currently support, as well as offering new products and services that we do not offer. We welcome these challenges as they indicate that the market we serve is growing rapidly, but we also have to continue to move quickly to address them, and that inspires us towards action and growth.
Outlook
As we have previously discussed, it is important for investors to remember that our business is inherently unpredictable. MTUs, Trading Volume, and therefore transaction revenue currently fluctuate, potentially materially, with Bitcoin price and crypto asset volatility. As a result, revenue is difficult to forecast. In the interest of transparency, our approach to sharing information relative to future performance will be consistent with how we operate the business. That includes assessing and planning for a wide range of potential outcomes.
As we have previously discussed, it is important for investors to remember that our business is inherently unpredictable. MTUs, Trading Volume, and therefore transaction revenue currently fluctuate, potentially materially, with Bitcoin price and crypto asset volatility. As a result, revenue is difficult to forecast. In the interest of transparency, our approach to sharing information relative to future performance will be consistent with how we operate the business. That includes assessing and planning for a wide range of potential outcomes.
Coinbase (COIN) stock price history since their listing
The image below shows the stock price history of Coinbase (COIN) since their listing. And its not been a good time for Coinbase (COIN) stockholders with the stock decreasing sharply by -21.2% since its listing
The stock of Coinbase (COIN) is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Coinbase (COIN) stock is positive at this point in time.
The stock of Coinbase (COIN) is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Coinbase (COIN) stock is positive at this point in time.
Latest stock valuation of Coinbase (COIN)
So what is Coinbase (COIN) stock worth based on their 1st quarter 2021 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Coinbase (COIN) at $202.50 stock
We therefore believe the stock of Coinbase (COIN) is overvalued at its current price of $258.37
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $202.50, thus a good entry point into Coinbase (COIN) would be at $182.30or below.
We expect the stock of Coinbase to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued
We rate the stock of Coinbase as a sell
We therefore believe the stock of Coinbase (COIN) is overvalued at its current price of $258.37
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $202.50, thus a good entry point into Coinbase (COIN) would be at $182.30or below.
We expect the stock of Coinbase to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued
We rate the stock of Coinbase as a sell
Next earnings release of Coinbase (COIN)
It is expected that Coinbase (COIN) will release their 2nd quarter 2021 earnings report in middle August 2021
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