Cryptocurrency exchange Coinbase stock (NASDAQ
So, is it time to buy Coinbase stock following this big sell-off? While it’s hard to time an entry into the stock amid the market volatility, there are some factors worth considering for potential investors. The going clearly is likely to remain tough for the company in the near to medium term, as crypto prices could remain depressed through the Fed’s monetary tightening, which will almost certainly impact activity on the company’s platform further. That said, Coinbase also has ample liquidity to ride out a downcycle, with its cash and cash equivalents at the end of Q1 2022 standing at $6.1 billion. It’s also very likely that the downtrend in crypto prices will eventually reverse. Bitcoin is seen as one of the most innovative technologies of our times, and as an asset it has shown resilience in the past, bouncing back stronger after big sell-offs. Although it is hard to say exactly how long a recovery will take, Coinbase has previously indicated the crypto cycle typically lasts from two to four years. Coinbase should be a big beneficiary as things eventually turn for the better, considering that it is the market leader in the cryptocurrency space. Coinbase has also shown potential for extraordinary profits during good times. Over 2021, the company’s total profits stood at $3.6 billion on revenues of just about $7.4 billion. These factors could make the risk-to-reward positioning of the stock attractive, versus historical levels.
We value Coinbase stock at $150 per share, which is significantly ahead of the current market price of $55 per share. See our analysis on Coinbase Valuation: Expensive or Cheap? for more details on Coinbase’s valuation. Also, check out our analysis on Coinbase Revenues: How Does COIN Make Money? for details on the company’s key revenue streams and how they have been trending.
Stock prices have fallen precipitously across sectors over 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 Crashes Compared.’
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