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Coinbase, one of the world’s most popular cryptocurrency trading platforms, has had a tumultuous first year as a publicly traded company. Less than 11 months in, the stock is trading at less than half of its debut price of $381. But despite its ups and downs, cryptocurrency is likely here to stay, and Coinbase intends to maintain its position as an industry leader.
Here’s what to know about Coinbase and whether the stock is a good buy right now.
What Is Coinbase?
Coinbase is a cryptocurrency exchange where you can buy and sell bitcoin and other cryptocurrencies, and it also provides a digital wallet you can use to store your holdings. Coinbase is the largest cryptocurrency exchange in the U.S. and the third largest globally, behind Binance and FTX.
How Does Coinbase Make Money?
Coinbase charges users a Coinbase fee and spread when they complete transactions. But the exchange isn’t Coinbase’s only income-producing product. The company offers a variety of products and services, including digital wallet storage and payment processing solutions, to consumers, businesses and developers.
How Much Is Coinbase Worth?
Coinbase has a market cap of $43.41 billion as of March 4. Market cap is one way investors measure a company’s value. It’s calculated by multiplying the number of outstanding shares by the share price, which, in this case, is $165.75.
What To Consider Before Investing In Coinbase
Investing in any stock comes with an inherent risk, so you’ll have to rely on your risk tolerance, your motivation for action and your own evaluation of the company’s prospects.
In its fourth-quarter 2021 letter to shareholders, Coinbase noted that the cryptocurrency market cap is down 20% overall — not surprising, as cryptocurrency prices generally drop after reaching record highs. With prices reduced, fewer people are trading, they’re trading less often and they’re making smaller trades. These are all important metrics for Coinbase, and the company expects the slowing trend to continue to negatively impact revenue in the first quarter of 2022.
Despite these challenges, Coinbase saw significant growth in 2021. Here are some key results:
- Monthly transacting users: Up 307%, from 2.8 million to 11.4 million
- Trading volume: Up nearly 766%, from $193 billion to $1.671 trillion
- Assets on platform: Up nearly 209%, from $90 billion to $278 billion
- Net revenue: Up over 544%, from $1.14 billion to $7.35 billion
- Net income: Up over 1,025%, from $322 million to $3.62 billion
The consensus recommendation among 23 analysts surveyed by Yahoo Finance is “buy.” The analysts’ average price target is $315.21 — 90% higher than the closing price of $165.75 on March 4, suggesting Coinbase could be a solid long-term investment for investors who feel comfortable with the heightened risks inherent in cryptocurrency-related stocks.
Keep in Mind
Many see investing in Coinbase as a way to take advantage of the popularity of cryptocurrency without investing directly. At the same time, that link to cryptocurrency means that there are factors to consider that are out of Coinbase’s control. Investors may still want to educate themselves on crypto news, including the coins available via Coinbase and overall cryptocurrency performance.
If you choose to invest, remember to set your budget and expectations ahead of time. Never invest more than you can afford to lose.
GOBankingRates’ Crypto Guides
Branford Shaw contributed to the reporting for this article.
Data was compiled between March 5 and March 6, 2022, and is subject to change.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
Read More: Coinbase Stock: Is It a Good Buy?