I Analyzed $COIN

$Coinbase(COIN.US)$ Coinbase is a company based in America that operates a cryptocurrency exchange platform. Their platform allows you to buy and sell cryptocurrency. At the time of this post, $COIN stock is currently sitting at $342.98. On November 9th they released their earnings report for Q3.

1.They reported revenue of $1.31 Billion which is up 315.9% From the same time last year, but they missed estimates by $270 million.

2.Subscription and services revenue was reported to be $145 million in Q3 which is up 41% from Q2.

3.Operating expenses were $1.0 billion in Q3 which is a 25% decrease compared to Q2.

4.$618 million in EBITDA, which is a 46% drop from last quarter.

Valuation: Coinbase is showing very low expected revenue growth and is ranked among the lowest when compared to its competitors, Microstrategy is the only company which is expected to fall behind Coinbase in 2022 and 2023. Coinbase is leading in EBITDA Margins though. Coinbase has the highest EBITDA margins in the industry, surpassing all of their comparable competitors. Furthermore they are trading at reasonable multiples. However, most crypto exchanges are private so there aren’t very many great companies to compare them against. Because of this, we cannot give Coinbase’s EBITDA multiples and revenue much credit.

Analysis: This was a very weak quarter for Coinbase, they reported weaker revenue than expected and the number of transacting monthly users dropped from the previous period. They reported 7.4 million monthly transacting users which was a 16% decrease from the previous quarter. Because of the drop in transacting users, Retail transaction revenue for Q3 was $1 billion, which was a decrease of 44% in comparison to Quarter 2.

Somehow Coinbase will have to figure out how to gain more users while charging the highest rates in the industry. Most of the Crypto traders out there know not to trade on Coinbase since their fees are costly. The company needs to somehow figure out how they’re going to achieve stronger revenue growth so they can elevate their valuations. However, To combat the shortage of revenue and users, Coinbase has been offering new products such as the NFT marketplace, making their company more versatile.

While the company may end up doing well, There is just too much risk with Coinbase since they have competition from exchanges that don’t charge as much in fees. I personally do not think Coinbase is a buy. Also, after the latest crypto bull run, It really is not good at all to see a bad quarter from this company. If you guys have any questions, feel free to drop them in the comments below or message me directly. Thanks for reading everyone, Make sure to check out the other write-ups on my profile. Good luck trading!