Coinbase

As has recently been the case for all events related to cryptocurrency, the Coinbase (Coin) initial public offering attracted significant attention from investors. Coinbase’s platform facilitates buying, selling and storing cryptocurrencies.

On listing, the coin share soared to a high of $ 629. This has been done after taking some profits, and the stock currently trades at around $ 300. It seems that Coinbase is attractive for long-term risk, considering the widespread adoption of cryptocurrency. Company specific fundamentals also point towards higher trend shares.

Which Factors Make Coinbase A Stand-Out?

A recent report by Crypto.com shows that by January 2021 the total number of global crypto users has reached 106 million. Six months ago, the number of crypto users was 74 million. Thus, cryptocurrency adoption seems to be at a turning point.

Specific to Coinbase, the number of users is steadily climbing. The company reported 32 million verified users for FY 2019. Last year, the number of verified users increased to 43,000. What’s more, for the first quarter of 2021, verified users increased to 56 million.

Of course, transaction transactions to users are more important from a revenue perspective than verified users. In December 2019, the company informed about 1 million translating users. By March 2021, transacting users increased to 6.1 million; In 15 months, the number of users transacting has increased six-fold. A large base of verified users is likely to ensure that transaction user growth remains strong.

These are all positive trends and are likely to translate to stock upside. (See Coinbase stock analysis on TipRanks)

Strong Growth And Margins

With an increase in transacting users, Coinbase has reported strong top-line growth.

A recent report by Crypto.com shows that by January 2021 the total number of global crypto users has reached 106 million. Six months ago, the number of crypto users was 74 million. Thus, cryptocurrency adoption seems to be at a turning point.

Specific to Coinbase, the number of users is steadily climbing. The company reported 32 million verified users for FY 2019. Last year, the number of verified users increased to 43,000. What’s more, for the first quarter of 2021, verified users increased to 56 million.

Of course, transaction transactions to users are more important from a revenue perspective than verified users. In December 2019, the company informed about 1 million translating users. By March 2021, transacting users increased to 6.1 million; In 15 months, the number of users transacting has increased six-fold. A large base of verified users is likely to ensure that transaction user growth remains strong.

On top of this, the company has seen a steady increase in market share. As of Q1 2021, the total assets on the company’s platform were $ 223 billion, representing 11.3% of the crypto asset market. In FY 2018, the company had a 4.5% crypto asset market share.

From a development perspective, it should be noted that in FY 2019, bitcoin and athorum trading accounted for 72% of the volume. In FY 2020, the trading volume concentration for both these assets declined to 56%. With Coinbase supporting an increasing number of assets, its trading volume will be less correlated with fluctuations in bitcoin prices, and is also likely to attract new users.

Wall Street’s Take

Turning to the analyst community, 5 buys and 2 holds have been assigned in the last three months. Therefore, the coinbase is a moderate buy. At $ 447, the average analyst price target implies a 50.18% upside potential.

Closing idea

Coinbase currently has a market capitalization of $ 59 billion. In keeping with the $ 1.8 billion FY2021 revenue guidance, coin stock trades at 32 times further revenue, which may seem expensive.

However, it is worth noting that top-line and cash flow growth are likely to remain strong for the coming years. Even if the top line growth is around 30% to 40% over the next few years, with a healthy EBITDA margin, the business will deliver strong free cash flow.

Hence, the stock looks attractive given its long-term growth potential. If bitcoin and cryptocurrency adoption continues to accelerate at the current pace, this could be the beginning of a growth story for Coinbase.

By Alex Alena

Alex Alena has been the lead news writer at Cryptocurrency Updates. With a degree in communications, Matt has an uncanny ability to make the most complex subject matter easy to understand.