Coinbase
One factor in Coinbase's poor performance has been the company warning that trading in cryptocurrencies is rapidly slowing. This obviously has negative implications for Coinbase's future revenues but a lot of weakness has already been discounted as evidenced by Coinbase. Further, the company has avenues for growth especially if technologies like defi or NFTs become more popular.
The company also warned that cryptocurrency revenues would remain 'volatile'.
Inside the Numbers
In Q4, Coinbase reported $3.32 in earnings per share, beating expectations of $1.85 per share. Revenue also beat expectations at $2.5 billion vs $1.94 billion expected. Overall, these figures were significant improvements from last year.
The company warned that retail monthly transaction users (MTUs) and total trading volume during Q1 would be lower than Q4. It attributed this to the worsening trading environment for cryptocurrencies. Thus, it expects subscriptions and services revenue to be lower in Q1. MTUs reached 11.4 million an increase from 7.4 million in Q3; Coinbase saw a decline in MTUs between the second and third quarters.
On its conference call, CEO Brian Armstrong didn't see a new bear market for cryptocurrencies. Instead, he said that there are increasing use cases for the technology which will drive future growth and adoption.
The company's newest initiative is its marketplace and platform for NFTs. The company sees NFTs as having multiple use cases including products for the metaverse. It also sees this as leading to a revenue stream that is less volatile than cryptocurrency trading commissions.
Coinbase is often thought of exclusively as a growth stock which makes sense considering its volatility, ownership by ARK funds, and crypto-focused business. However, from another perspective, it has a lot in common with traditional banks and brokerages as it's essentially providing these types of services to the crypto market.
This is also reflected in the company having a forward P/E of 29 which shows that it's much more reasonably valued than other growth stocks. However, the stock's near-term direction will be determined by crypto prices but it's also clear that Coinbase is an impressive business in a space that is full of less impressive ones.
