Let’s take a look in the rearview mirror to see how the biggest public debut of 2021, Coinbase, is faring as the crypto market experiences hiccups.
Closing its first day of trading with an $87 billion valuation, Coinbase was the seventh-largest new U.S. public listing of all time.
But with global crypto markets in a tizzy over new government crackdowns, how has the company fared since?
Things could be better…
Since it began trading in April, Coinbase has failed to excite investors, despite pretty impressive figures in its first earnings report as a publicly-listed company:
Total revenue of $1.8 billion, up almost 800% from the year previous.
Earnings per share of $3.05 and net profit of over $771 million — more than fourfold the figure from the quarter previous.
It seems that the main worry for investors is that the company’s stock price tends to fluctuate in conjunction with the value of Bitcoin and other cryptocurrencies. And if there’s one thing we know about digital currencies, it’s that they are very volatile, even on a good day (never mind those times when Elon Musk sends the entire crypto market crashing with just a few short tweets).
Back in May, Coinbase shares fell sharply with the price of Bitcoin during the crypto crash. Coinbase shares have still not recovered from the crypto dump and are down over 20% from its IPO date.
So what’s the big takeaway from this story?
Firstly, Coinbase is a great example of why you should practice patience and wait a few months before investing in a company that has recently listed. This allows its share price to settle a little.
Secondly, Coinbase is a unique company to invest in because its fortunes are inherently tied to a separate asset class. While the company’s common stock might be structured like any other publicly-listed company in the U.S., its fundamentals depend entirely on the fortunes of Bitcoin, Dogecoin, and other digital assets, which means that you really have to be bullish about the future of cryptos to be bullish about Coinbase.
With countries like China and Britain making big moves to curtail the use of Bitcoin and similar cryptocurrencies, there’s sure to be a lot of uncertainty ahead.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.