It’s no secret that over the last few years the crypto-economy has experienced major expansion. For example, total crypto market capitalisation in 2018 was $123bn, whereas last year it was over $2trn. However, since its IPO in April last year, US-based exchange Coinbase (NASDAQ: COIN) has struggled, with its share price down nearly 50% since.
After the recent release of its Q4 and full-year results, the stock initially soared. Yet, investors sold off the spike, bringing the price back down.
With the stock down 7% in the last five days, this begs the question should I be buying Coinbase shares today? Let’s take a look.
Q4 results
Let’s start by looking at the Q4 earnings the firm released last week. In the three months ending 31 December 2021, Coinbase generated $2.5bn in revenue, up from the $585m in the same period of the previous year. On top of this, net income rose from $177m in Q4 2020 to $840m in Q4 2021, representing a staggering 375% increase. Trading volume also increased quarter-on-quarter, from $89bn to $547bn, a massive 514% rise.
These figures represent a small proportion of what was an impressive set of results. As a potential investor, these are positive signs.
So, why is the share price down?
If the firm posted such strong Q4 and full-year results, then why have investors rushed to offload their holdings?
Well, this is mainly due to Coinbase’s comments regarding Q1 2022 projections, which look set to fall short of expectations. This is primarily seen through total trading volume, which was $200bn at the time of the release. This has Coinbase on track to widely miss the mark when compared to last quarter. However, Coinbase mentioned how historically “all-time high periods have been followed by softer periods”. As a long-term investor, short periods of volatility are of no concern to me. Instead, I see Coinbase shares as an attractive potential addition to my portfolio.
Coinbase NFT marketplace
What also excites me is the launch of its non-fungible token (NFT) platform. The use of NFTs has grown massively over the past 12 months, with NFT sales reaching nearly $20bn in 2021. This was up from less than $100m in 2020. And over 3m people have already signed up for the waiting list. Further, Coinbase’s NFT marketplace will allow users to buy NFTs without crypto. This, along with its brand recognition, could give it an edge over competitors such as OpenSea when attracting a wider audience.
Would I buy?
So, will I be buying Coinbase shares? Well, despite the projected slow start to the year, I think 2022 could be a strong year for Coinbase. According to a recent study, nearly one in four US households own crypto – and I think in 2022 we will see this increase. The launch of its NFT marketplace is an exciting prospect, and I think that should its launch be successful, it will boost the firm’s future performance. Currently trading for $176, I would be willing to add the stock to my portfolio.
The post Should I be buying Coinbase shares today? appeared first on The Motley Fool UK.
Is this little-known company the next ‘Monster’ IPO?
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
Click here to see how you can get a copy of this report for yourself today
More reading
3 Foolish ways I’m dealing with stock market volatility
5 practical steps to handle a stock market sell-off
Should I be adding IAG shares to my portfolio?
NIO shares hit $20: should I buy now?
2 cheap value stocks with big dividends to buy in March
The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Coinbase Global, Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
