Coinbase Global (COIN 4.02%) has been hit hard by the broader crypto sell-off, with asset values in popular cryptos dropping due to waning investor enthusiasm when compared to previous periods. Coinbase’s stock price has generally tracked Bitcoin since its IPO a year ago. However, this may be an indication that some people have little knowledge of Coinbase’s full offering. While the primary goal of Coinbase is to trade cryptocurrencies, it offers a variety of other services, which include crypto wallets, non-fungible tokens (NFTs), and advanced trading tools like derivatives.
Coinbase’s stock has lost roughly half of its value over the previous month. However, after a negative Q1 earnings report, the firm has seen a small recovery as a result of institutional and insider purchases.
Investors are divided
Wall Street is extremely split about Coinbase’s future following the company’s Q1 financial results.
Cathie Wood, the CEO of Cathie Wood Asset Management, owns close to 8 million shares in Coinbase. While the tech investor has been steadily purchasing the stock since Jan., Wood increased her crypto position after the earnings report by acquiring almost 1 million additional shares.
Following the Q1 earnings report, board member and co-founder Frederick Ehrsam acquired roughly $75 million of stock.
Despite the fact that Wood and one insider are positive about Coinbase’s long-term prospects, traditional Wall Street banks remain undecided regarding the firm’s future. During an interview with CNBC, Dan Dolev recently warned that Coinbase might not be able to capture and sustain more market share, the future adoption of crypto, and the company’s enthusiastic recruitment. In contrast, analyst Owen Lau thinks that Coinbase is currently trading at favorable levels for longer-term investors, noting growing engagement from major institutions as it pertains to crypto.
While investors were given a front-row seat to how much money has been invested in developing the firm’s NFT platform, as well as its efforts to develop more sophisticated products such as derivatives, which are also offered by Coinbase competitors Gemini and FTX, executives made it known that these applications would be crucial for the development of crypto. Since April, when the NFT function was introduced, and throughout Q1 when some of Coinbase Wallet’s newer features were introduced, investors haven’t had much data to go on.
Despite the fact that Coinbase’s near-term prospects for Q2 are lower than those of Q1 due to decreasing trading volumes and transacting users, as well as high operational expenditures linked with hiring and management, the company informed investors that its spend is tracked and that it is needed in order to be the leader in the crypto market. Despite shaky Q2 expectations, the firm’s full-year 2022 forecasts have not changed because it believes crypto will recover if investor sentiment in the larger market improves.
While the rest of the crypto market is suffering heavy selling, long-term investors may see this as an opportunity to add or start a position in Coinbase stock.