I couldn't help myself. I bought more Coinbase stock. The largest cryptocurrency exchange in the United States by trading volume, is trading at a significant discount from its IPO price. COIN is a crypto stock to watch very closely. Coinbase is highly profitable with an EBITDA Margin of 61%.
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Coinbase revenue tripled from last quarter ($1.80B of revenue in Q1'21 vs $585M in Q4'20 vs $191M Q1'20), which matched their estimated given in April (this is good = trust!!). Net profit was $771M (43% margin = WILD), which is more than 4X over Q4 2020′s net profit of $177M and more than 24X what it was in Q1'2020. On the earnings call, they said they planned to list dogecoin in the next 6 to 8 weeks. Roughly 94% of the company’s net revenue in Q1 came from transaction fees from trading = More volatility = More revenue. No guidance for Q2. 👉 In my opinion, these earnings were excellent. There's not a single thing that I didn't like or that I'm concerned about. Very happy with my Coinbase position, I'm expecting great gains in the years to come. For context, 11% of the whole crypto market trades on Coinbase. They have a fast-growing 56M user base and $223B in total assets on the platform. Coinbase recognizes revenue by taking a% of each bitcoin transaction. If Bitcoin's market cap increases, Coinbase's revenue increases by the same %. Therein lies the risk and the opportunity. Coinbase is a pure play on Bitcoin. In 2020, only 4% of their revenues were spent on marketing. In 2021, they are planning on quadrupling the marketing spend, which will help sustain momentum and capture further market share. If you were to factor in cash from their balance sheet and the cash from their IPO, Coinbase has a strong liquidity position. Given the asset class, their 100% yearly revenue growth and marketing plans, I think that this multiple is justified and can sustain itself. 🔥
Whether or not the fundamentals of Bitcoin have changed, that's a different question. But taking everything into consideration, I'm still bullish on Bitcoin and I think that this dip was a buying opportunity (not financial advice). Just zoom out for a second, compare bitcoin to where it was last year, and it's a completely different picture. Yes, Tesla is bearish on Bitcoin, but that's just one company out of the hundreds (thousands?) that have decided to adopt Bitcoin this year. Be greedy when others are fearful. Last week, we were at peak fear. Just putting that out there. Personally, I think that crypto is here to stay. Sure we might see volatility but it's the long-run that counts. A lot of people are fearful that Bitcoin is going to cease to exist but I think that cancelling a trillion dollar asset is super unlikely at this point. #Coinbase #IPO #Bitcoin
