Coinbase is off to a strong start in January, with shares trading +50% higher YTD.
To be fair, the company had a rough year. Its stock plummeted in value from Nov. ’21 highs as Bitcoin (and other cryptocurrencies) crashed.
But recent data shows signs of life.
Here’s the bullish case for Coinbase:
Coinbase performance is closely tied to Ethereum and Bitcoin interest
Both cryptocurrencies comprised more than 60% of the platform's trading volume in the 3rd quarter (33% and 31% respectively). As Bitcoin and Ethereum interest gain steam, Coinbase is likely to benefit.
Ethereum and Bitcoin are already showing signs of positive momentum, with both posting +27% or higher gains in the last month.
Coinbase is cutting costs
Last week it announced plans to lay off 20% of its staff (on top of the 18% it laid off last Summer). Many deem this move critical to power a turnaround for the company and its stock.
Coinbase is increasingly viewed as a legitimate "safe-haven" for crypto investors
Its financial statements are audited by a Big Four accounting firm. These firms have been unwilling to audit peers like Binance and other private cryptocurrency platforms.
We've seen this transparency and accountability boost Coinbase's consumer happiness levels, especially in light of the FTX collapse in early November of last year.
COIN sentiment has improved by +4 points YoY and +15 points from July lows spurring from an SEC probe.
Bottom Line: Coinbase appears to be the major winner of renewed consumer interest in cryptocurrency.
Coinbase demand is rising again, after several quarters of decline. Mentions from consumers using or adopting that platform have risen +47% QoQ.
|This renewed interest coincides with crypto trading activity. Crypto trading mentions are rising again in the current quarter at a strong pace. |
Landon, Megan, and I discussed the Bullish case for Coinbase in depth last November (prophetic).
Coinbase isn’t slated to report 4th quarter earnings for another month. But if current trends hold up, guidance may be much better than expected.