Coinbase (Nasdaq: COIN) has been one of the most high-profile IPOs in recent years as it's the first major crypto-based and focused institution. Coinbase is the largest U.S. cryptocurrency exchange, and its achieved remarkable growth in its short existence.
It's achieved a valuation of $50 billion which makes it one of the most valuable financial companies in the world. Of course, this is largely based on its potential rather than its current revenue of $1.2 billion. Thus, investors will closely watching earnings reports to see whether company is maintaining growth to justify this valuation.
Inside the Numbers
In Q1, the company reported $3.05 in earnings per share and $1.8 billion in revenue. Currently, analysts are not making estimates for the stock given its newness and the lack of familiarity with crypto. However, the figures were a stark improvement from its last quarter. Earnings was up by a multiple of four, while revenue was up 180%.
Such growth makes sense considering the strength in crypto assets, and heavy retail involvement in that market. The company also announced that it would list dogecoin on the exchange in the next 6 to 8 weeks which has become the hottest cryptocurrency due to its 26,000% gain over the last six months.
Monthly active users more than doubled to 6.1 million users, while it has 56 million verified users. This growth led to trading volumes more than tripling from the previous quarter.
Currently, Coinbase's business is closely tied to the performance of digital assets. 94% of net revenue in the quarter came from transaction fees from trading. Of course, there's more interest and inflows in the market given that bitcoin prices nearly doubled during the quarter, while ethereum prices tripled.
The company didn't offer detailed guidance for Q2 or the full year given the unpredictability of the crypto market. It does expect that monthly active users will grow to 9 million by the end of the year and believes that average revenue per user will reach $45 to $50.
Stock Price
Coinbase is substantially down from its IPO peak of $381 per share which implied a valuation of $100 billion. Largely, this is due to the weakness in growth stocks and cryptocurrencies over the past week. All sorts of crypto stocks are down by more than 50% over the past month.
Despite this decline, Coinbase remains expensive by many measures. In terms of upside, the price will be closely connected to crypto-prices. Given this dynamic, investors might be better off just buying the underlying cryptocurrencies.