Does Coinbase Deserve a Place in Your Portfolio?

: COIN | Coinbase Global Inc. News, Ratings, and Charts

COIN – Among other contributing factors, crypto economy-based financial technology company Coinbase’s (COIN) shares have soared in price over the past few months on bitcoin’s price advance. But can the stock continue to gain even in the face of an ongoing investigation into the company? Read on to learn more.

Coinbase Global, Inc. (COIN), which is a San Francisco-based concern, provides financial infrastructure and technology for the crypto sector. The company made its stock market debut on April 14, 2021, at a nearly $100 billion valuation. On the first day of trading, its shares soared in price to hit their 52-week high of $429.54, due partly to investor optimism because  Cathie Wood bought approximately  $245.90 million  of its shares.

The stock has gained 24.4% in price over the past month to close Friday’s trading session at $300.84. However, it is currently trading 30% below its 52-week high.

This month, COIN became the custody partner of Facebook, Inc.’s (FB) new digital wallet, Novi. It also announced Coinbase NFT on October 12, a peer-to-peer marketplace that is expected to make minting, purchasing, showcasing, and discovering NFTs easier than ever. In addition, bitcoin’s sky-high prices have helped COIN gain. However, the company’s director, Frederick Ernest Ehrsam III, sold  87,649 shares. In addition, this month, Cathie Wood’s Ark Invest completed the sale of 98,427 shares of COIN. Investigations into the company are also ongoing on alleged violations of securities laws. So, its near-term prospects look uncertain.

Click here to check out our Cryptocurrency Industry Report for 2021

Here’s what could influence COIN’s performance in the coming months:

Impressive Financials

COIN’s total revenue came in at $2.23 billion for the second quarter ended June 30, 2021, compared to $186.38 million in the year-ago period. The company’s monthly transacting users (MTU) increased 486.7% year-over-year to 8.80 million. Its trading volume increased 1,550% year-over-year from the same period last year to $462 billion. While its net income was $1.61 billion, up 4,918.8% year-over-year, its adjusted EBITDA increased 1,785.2% year-over-year to $1.15 billion.

Ongoing Investigation

Several law firms have launched an investigation into  COIN on alleged violations of  federal securities laws under the Securities Exchange Act of 1933. It is alleged that the company made false or misleading statements or excluded at the time of offering that it required a sizable cash injection and that its platform was susceptible to service-level disruptions. So, this action has the potential to harm the company.

Stretched Valuation

In terms of forward non-GAAP P/E, COIN’s 23.09x is 96.7% higher than the 11.74x industry average. Likewise, the stock’s 8.50x and 17.35x respective EV/S and EV/EBITDA are higher than the 3.27x and 12.50x industry averages. Moreover, its P/S of 8.85x is 154.9% higher than the 3.47x industry average.

POWR Ratings Don’t Indicate Enough Upside

COIN has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. COIN has a B grade for Quality, which is in sync with its 100% trailing-12-month gross profit margin, which is higher than the 63.72% industry average.

However, the stock has a D grade for Value, which is consistent with its higher-than-industry valuation ratios. In addition, COIN has an F grade for Stability.

COIN is ranked #48 out of 160 stocks in the Software – Application industry. In addition to the POWR Rating grades I’ve just highlighted, we’ve also rated the stock for Growth, Sentiment, and Momentum. Get all the COIN ratings here.

Click here to check out our Software Industry Report for 2021

Bottom Line

COIN reported impressive second-quarter financials. However, analysts expect its revenue and EPS to decline 8.6% and 50.3%, respectively, year-over-year to $6.47 billion and $6.32 in its fiscal year 2022. So, the stock looks significantly overvalued at its current price level, and we think it could be wise to wait for a pullback before adding the stock to one’s portfolio.

How Does Coinbase (COIN) Stack Up Against its Peers?

While COIN has an overall POWR Rating of C, one  might want to consider investing in Software-Application stocks with an A (Strong Buy) rating, such as Commvault Systems, Inc. (CVLT), Open Text Corporation (OTEX), and National Instruments Corporation (NATI).

Click here to check out our Cryptocurrency Industry Report for 2021


COIN shares were trading at $311.78 per share on Monday morning, up $10.94 (+3.64%). Year-to-date, COIN has declined -5.03%, versus a 22.54% rise in the benchmark S&P 500 index during the same period.


About the Author: Manisha Chatterjee


Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
COINGet RatingGet RatingGet Rating
OTEXGet RatingGet RatingGet Rating
CVLTGet RatingGet RatingGet Rating
NATIGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

3 Energy Stocks Set to Soar Beyond Expectations

Given the geopolitical tensions, increasing global oil demand, and supply adjustments, the energy sector is poised for robust growth. Therefore, investors might consider investing in energy stocks TechnipFMC (FTI), Weatherford International (WFRD), and ChampionX (CHX), which are poised to exceed expectations. Keep reading…

Has Carnival (CCL) Stock Turned Into a Buy After Earnings Release?

Carnival Corporation (CCL) reported record revenue in its most recent quarter but still faces a negative bottom line. The collapse of Francis Scott Key Bridge brings more uncertainty to its financials. Given these events, what stance should one take with CCL stock? Read more to find out…

3 China Stocks Positioned for Long-Term Growth

Despite facing challenges, the Chinese economy has demonstrated resilience, as evidenced by recent robust industrial output and retail sales data. Given this outlook, it might be an opportune time to own three top-notch China stocks, JD.com, Inc. (JD), China Automotive Systems (CAAS), and Youdao, Inc. (DAO). Read on…

Investor Alert: “Buy the Rumor, Sell the News!”

Everyone knows that the Fed is going to cut rates at some point this year. That is the worst kept secret on the planet helping to explain how we keep making new highs for the for the S&P 500 (SPY). Unfortunately that creates an interesting predicament for stocks after rates are cut. Plus another hurdle in the 2024 Presidential election. Steve Reitmeister is here to share his insights on the market outlook along with a preview of his top 12 stocks to outperform. Read on for more...

Read More Stories

More Coinbase Global Inc. (COIN) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All COIN News