COINBASE, H1
American cryptocurrency exchange platform Coinbase Global, Inc., known as Coinbase, is expected to report earnings today (May 13) after the market closes. The report is for the fiscal quarter ending March 2021. Coinbase went public on April 14 via live listing on the Nasdaq exchange with the ticker COIN and the proposed listing price opened at $381.
The Coinbase platform allows retail and institutional customers to buy, sell and store cryptocurrencies such as Bitcoin and Ethereum. The company primarily reaches customers through the Coinbase, Coinbase Pro and Coinbase Wallet apps and their websites. Coinbase had a total of around 56 million retail users as of Q1 2021. About 90% of the company’s revenue (as of 2020) comes from transaction fees from trading and through services such as storage and analytics. Coinbase charges its customers a transaction fee (0.5%) based on the volume they trade. The company’s commissions are higher than traditional exchanges, due to the higher transaction fees for Bitcoin and other cryptos. About 10% of the company’s revenue comes from selling its own crypto assets to customers.
The company’s transaction revenue is heavily dependent on the cryptocurrency price trend (led by Bitcoin), which affects the number of users transacting monthly on the platform and the total value of transactions. The higher price volatility for crypto assets also usually helps with income. Total revenue increased from about $534 million in 2019 to $1.28 billion in 2020, as the company’s monthly transaction users increased from about 1 million to around 2.8 million during the period, with total trading volume increasing from about $80 billion to $193 billion. In Q1 2021 revenue forecast grew to $1.8 billion, with trading volume for the quarter rising to $335 billion as Bitcoin’s price nearly doubled year over year, causing the number of active monthly traders to jump from 2.8 million at the end of last year to 6.1 million in Q1. Nonetheless, it may not be realistic to expect the company to maintain its Q1 growth rate for the remainder of 2021, given the cyclical nature of the crypto market. In addition, the increase in bond yields and the incredible 8x Bitcoin price hike makes the crypto market quite vulnerable to a correction in the near term. : Forbes
According to a coindesk, report, the COIN share price could drop to $100 or less if the company is not able to meet earnings expectations in the future, according to a US investment research firm.
The CEO of Nashville-based company New Constructs, David Trainer, said, “At [Coinbase] current prices… the stock valuation implies that the company will exceed the combined revenues of the Intercontinental Exchange and the Nasdaq. We do not expect [Coinbase] to report any news from [Q1 of this year] that can justify holding shares at current levels. Even though the exchange has posted impressive year-on-year revenue and an increase in users, the research firm still believes that stocks will continue to decline in the long run.”
Coinbase shares have fallen 12% since debuting on the Nasdaq in mid-April with an opening price of around $381. Up 20% from May 6 lows around $250, Coinbase stock recently traded at $300, with buyers showing some signs of life.
At the time of writing, Coinbase is trading around $290.00, correcting from its $250.50 rebound after hitting the $306.88 average resistance. Immediate support is at $279.00. A move above $306.88 will validate the $250.50 rebound to the $325.00 projection. As long as the resistance at $306.88 remains intact, the price will possibly continue its downside bias and thus the rebound will be canceled.
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Ady Phangestu
Analyst – HF Indonesia
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