On Tuesday, Coinbase announced its earnings for the first quarter of 2022, stating that it generated $1.17 billion in revenue for the period, while the markets were expecting it to deliver $1.48 billion. That $310 million miss represented a 50% decline in revenue from the previous quarter. During the earnings call, Coinbase CEO Brian Amstrong blamed the underwhelming performance on the broader economic downturn.
“I think it’s worth just addressing the elephant in the room, which is that, of course, the broader markets are down. We’re seeing a down market for growth tech stocks and risk assets. And of course, Coinbase and crypto is no exception to that. So, the good news is that as a crypto company, we’ve lived through many different cycles in crypto, including major drawdowns which, I think, make us well-suited to operate through these environments,” said Armstrong.
At time of writing, COIN was trading at $56.70 per share, which is a 33% decrease from yesterday’s peak price of $85.03 at 9:45 a.m. EST, according to Yahoo! Finance. Despite the negative revenue numbers, the trading platform saw a year-over-year increase in its monthly transacting users (MTUs). Coinbase had 9.2 million MTUs in the first quarter of this year, compared to 6.1 million in 2021, marking a 50% increase. The number of active monthly users is an important measure of health for the exchange and bodes well for its future.
What Is Coinbase?
Coinbase was the first major crypto business to go public in the U.S. when it began trading at $381 in April on the Nasdaq, giving the cryptocurrency exchange an initial market cap of $99.6 billion on a fully diluted basis.
Coinbase is an app that lets you buy and sell all sorts of cryptocurrencies, like bitcoin, ethereum, litecoin and about 50 others. You can also use Coinbase to convert one cryptocurrency to another, or to send and receive cryptocurrency to and from other people. Like stock trading apps you may already be familiar with, Coinbase shows you the current price and trends for cryptocurrencies, a look at your portfolio of holdings, and news stories about the industry.
Should You Invest In Coinbase?
As background, Coinbase had its initial public stock offering on April 14, 2021, with a launch listing price of $250 a share when it began trading on the tech-heavy NASDAQ stock exchange. The price of COIN stock surged more than 70% within hours of its debut, to hit a high of $429.54 before closing its first trading day at $328.28. At that time, the company had a market capitalization of $87.3 billion. Since Coinbase provides trading options for dozens of the most popular and valuable virtual currency projects, it is widely regarded as a de facto crypto “index fund” that provides broad crypto access with a single investment vehicle.
As of today’s price action, COIN is trading at an 87% discount from its all-time high. This is not financial advice, and investors should always do their own research and invest only amounts they can comfortably afford to lose. But given Coinbase’s scale, ease of use, market share, structure as a default crypto index fund, and diversification plans, my personal opinion is that it’s definitely worth considering at this price.