If you invested 00 in Coinbase in 2021, this is how much you would have now

If you invested $1000 in Coinbase in 2021, this is how much you would have now

When it comes to innovative and disruptive enterprises, Coinbase Global (NASDAQ:COIN) probably comes to mind. The leading digital asset brokerage and exchange operator is at the forefront of efforts to bring cryptocurrencies to the masses.

But stocks haven’t been very kind to investors in recent years. If you invested $1,000 in Coinbase in April 2021, the time it had initial public offering (IPO), your position would be worth only $470 today (as of February 5). This translates to a 53% decline, a disappointment when compared to the 15% increase of Nasdaq Composite Index during the same time (including dividends).

Let’s look back on this top crypto stocksBrief history of ‘s as a publicly traded company. Then we can understand whether investors should consider buying the stock now.

Coinbase’s wild ride

It was either extreme luck or a stroke of genius, but Coinbase couldn’t have gone public at a better time. Stocks and cryptocurrencies were on a bull market during the post-pandemic boom, lifting the stock 43% from $250 at its IPO to an all-time high in November 2021. Although the stock is up an incredible 231% since by the beginning of 2023, it remains 67% below that previous peak.

Stock volatility reflects the unpredictable nature of the underlying business. In 2021, Coinbase generated 93% of its revenue from transaction fees, which are derived from providing crypto trading services to both individuals and institutions. When asset prices are rising, as they were about three years ago, the company’s financial statements reflect that.

Coinbase reported revenue growth of over 500% in 2021. And its net income reached $3.6 billion. However, the good times were coming to an end.

like Federal Reserve entering an aggressive rate hike cycle in early 2022, risky assets began to decline. With investors flocking to cryptocurrencies, the once-thriving Coinbase crashed again. Sales fell 59% in 2022. Even worse, the company posted a staggering net loss of $2.6 billion that year.

Last year was a year of optimism. Management has focused on cutting costs across the board, a strategy similar to many other growing technology businesses, and losses have fallen sharply.

With the overall crypto market doubling in value by 2023, there may be better days ahead for Coinbase.

Is It Time To Buy Coinbase Shares?

What’s encouraging is that despite this crazy ride, Coinbase is still here. And remains a leading crypto broker and exchange. That’s because since its founding, CEO Brian Armstrong has made it a point to work with regulators within existing rules, rather than trying to circumvent them. This positions the company as a trusted and trusted name in the industry, which can be a competitive advantage.

However, management wants to make the company more stable and predictable. In the third quarter of 2023 (ended September 30), about half of Coinbase’s revenue came from the services and subscriptions segment.

That division, which includes things like stock and custody solutions, grew sales by 59% year over year. As a custodian for many recently approved sites Bitcoin exchange traded fundsCoinbase could see this segment continue on its path to becoming a more important financial driver.

This is certainly what investors want to see, as it can ease extreme volatility. But at the end of the day, buying Coinbase stock still represents a bet on the growth of the entire cryptocurrency industry. Instead of having to pick individual digital assets that could be tomorrow’s winners, investors can consider Coinbase as a way to gain adequate exposure to the space.

Shares are no longer cheap at around 10 times sales. But the upside is certainly there for long-term investors who are keen on this business and industry. Just understand that this is still a very risky area of ​​the market.

Should you invest $1000 in Coinbase Global right now?

Before you buy shares in Coinbase Global, consider this:

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Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.

If You Invested $1,000 in Coinbase in 2021, This Is How Much You’d Have Now was originally published by The Motley Fool

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