COINBASE STOCK ANALYSIS - Still a Buy? Intrinsic Value Calculation!

TL;DR

Coinbase is the largest cryptocurrency exchange in the US, experiencing a drop in market cap after its IPO. This analysis covers its business model, growth catalysts, major risks, fair intrinsic value, and the author's view on buying the stock.

Transcript

hello everyone this victor here welcome to the intelligent investor channel several subscribers asked me to make a stock analysis video about coinbase stock now coinbase initially passed above 100 billion market cap on the first trading day when it went ipo but now it has dropped substantially to around 52.5 billion market cap at the time of making... Read More

Key Insights

• 📼 Coinbase's revenue largely depends on the price movements of bitcoin and other crypto assets.
• ❓ The increasing adoption of cryptocurrencies, especially bitcoin and ethereum, is a significant growth catalyst for Coinbase.
• 👨‍💼 Market corrections in the crypto market and regulatory uncertainties pose risks to Coinbase's business.
• 💱 Competition from other exchanges like Binance and cybersecurity threats are also important considerations for Coinbase.
• ☠️ The fair intrinsic value of Coinbase stock is estimated to be around $186 to $362 per share, depending on growth rate assumptions.
• 😘 The author has a small position in Coinbase stock but would wait for a lower stock price to increase the margin of safety.

Questions & Answers

Q: What is the main source of revenue for Coinbase?

Coinbase generates most of its revenue from trading transaction fees, with 96% of its net revenues in 2020 coming from cryptocurrency trading fees.

Q: What are the three long-term growth catalysts for Coinbase?

The three long-term growth catalysts for Coinbase are the increasing adoption of cryptocurrencies, higher inflation rate risk, and the potential for institutional investors and companies to invest in bitcoin and other cryptocurrencies.

Q: What are the major risks associated with Coinbase?

The major risks for Coinbase include potential market corrections in the crypto market, regulatory uncertainties, increasing competition from other exchanges like Binance, and cybersecurity threats.

Q: What is the estimated fair intrinsic value of Coinbase stock?

The estimated fair intrinsic value of Coinbase stock varies based on different scenarios. It ranges from $186 per share to $362 per share, depending on the compound annual growth rate assumptions for the next five years.

Summary & Key Takeaways

• Coinbase is the largest cryptocurrency exchange in the US, offering trading services for over 180 digital assets, with bitcoin and ethereum being the most prominent.

• The key revenue drivers for Coinbase include fluctuations in crypto asset prices, monthly transacting users, trading volume, and assets held on the platform.

• Coinbase's long-term growth catalysts include the increasing adoption of cryptocurrencies, higher inflation rate risk, and the potential for institutional investors to invest in bitcoin and other cryptos.