Coinbase stock (NASDAQ:COIN) has promising growth and profitability prospects as the business stands to gain from the next crypto bull market. However, competition will heat up, putting a brake on profitability.
The market capitalization of Coinbase stock
Following favorable news and a robust Bitcoin (BTC-USD) rebound, Coinbase stock (NASDAQ:COIN) has lately surged. According to expert estimates, Coinbase seems undervalued, which is why I anticipate it to climb rapidly, particularly as we approach a new crypto bull market. Despite the regulatory uncertainties surrounding cryptocurrency, I believe coinbase stock has a fair value of at least $260.
A Brief Overview
Coinbase (COIN) is one of the worlds major exchanges. Brian Armstrong launched it in 2012 and began trading openly on the Nasdaq in April 2021. This was at the peak of stock market prices, and Coinbase shares started trading at $250, representing a $86 billion valuation.
Coinbase peaked at over $360 in November but has subsequently plummeted along with most Nasdaq equities. Coinbase stock (NASDAQ:COIN) was selling a little over $40 at its lowest point. However, in the last month, we have witnessed a significant increase, with Coinbase generating news for both positive and negative reasons.
Unfortunately, Coinbase has been charged by the SEC with dealing with unregistered securities. Of course, this dispute extends to the definition of cryptocurrency. In addition, a former Coinbase stock manager has been charged with insider trading. Allegedly, the manager utilized various wallets to acquire tokens before public placement on Coinbase.
While these revelations weighed on the price of coinbase stock, the companys shares rose on the news that it was working with BlackRock to give institutional investors access to cryptocurrency. This news is significant for Coinbase.
Coinbase stock (NASDAQ:COIN) has recently surged as we approach the Ethereum (ETH-USD) merger, which many regards as good news for Coinbase. The firm may stand to benefit from Ethereum staking.
How does Coinbase (COIN) generate revenue?
According to this excerpt from Coinbases annual report, about 90% of revenues come from transaction revenues, most of which come from retail. Coinbase charges a small fee for each transaction, much like a stockbroker or a payment processor. Subscriptions and services like custody also generate money for Coinbase.
Coinbases income increased significantly from $533.735 million in 2019 to approximately $8 billion in 2021. Granted, this occurred during an extraordinary crypto bull run. Growth in 2022 is expected to be substantially lower.
Users are another significant measure for Coinbase, and they have also been growing at a good pace. Monthly transactional users climbed by 307%, almost tripling the number of verified users. This increase in transactional users demonstrates the dynamic of retail traders being increasingly active at the bull markets peak.
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Author: Okoro Chinedu
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