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COIN Stock: Coinbase to Reflect Accelerated Internet Growth


Coinbase (NASDAQ:PIECE OF MONEY) reported on November 9 in its third quarter earnings report that it hopes crypto trading grows just as the internet grows. As a result, COIN stock could possibly rebound as the level of trading increases.

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The report has a very interesting graph on page 3 showing the historical similarities. It shows the growth of crypto trading versus internet adoption over time spaced 24 years apart.

The lines of the graph are almost identical in terms of the growth in adoption of crypto compared to the Internet. It was developed by the World Bank and crypto.com.

The point is, cryptocurrency is here to stay, and so is the internet. The graph shows that Internet adoption started in 1990 with 5 million users. Then it grew in 10 years to almost three quarters of a billion in 2001. At the end of 1998, eight years after its launch, there were 300 million users.

The same thing started in 2014 with the adoption of crypto and grew to around 300 million users in eight years by the end of 2021.

Where it leaves Coinbase

Coinbase indicates in its letter that the rate of crypto adoption is accelerating, just as internet adoption increased in the 1990s. Here is what the company concludes:

We can see the beginnings of this shift with the dramatic progress in crypto participation in 2021. The total crypto market cap at the end of the third quarter was around $ 2,000 billion, up from around $ 800 billion. at the end of 2020.

In other words, cryptocurrency trading is increasing quite dramatically. The growth from $ 800 billion to $ 2 billion in the space of three quarters shows that participation in crypto is accelerating and the value of assets is increasing rapidly.

The bottom line is that this rapid growth reflects the growth of the internet in the 1990s. Coinbase believes this will fuel their growth in the long run. This despite the high volatility in crypto prices and trading, especially as shown in the company’s latest report.

For example, revenue fell from $ 2.033 billion in the second quarter to just $ 1.235 billion at the end of the third quarter. As a result, the company’s profits fell dramatically.

Additionally, net income was $ 1.6 billion in the second quarter, and it dropped sharply to $ 406 million in the third quarter. Additionally, Coinbase’s EBITDA (earnings before interest, taxes, depreciation and amortization) fell from $ 1.15 billion in the second quarter to just $ 618 million in the third quarter.

So I guess you can see why the company is trying to focus on secular long term trends. The reason is that the short term results are very volatile. Their hope is that over time the volatility will tend more and more.

What to do with COIN’s stock

The most logical conclusion that follows is that if you want to own COIN stocks, just make sure you hold them for the long term. This way, your COIN stock holding will reflect the long term trend of crypto adoption and asset price increases.

In this way, the value of the COIN stock can rise, albeit unsteadily due to the volatility of crypto prices. For example, recently the stock peaked on November 9 at $ 357.39. But on November 29, it closed at $ 320.35.

However, the stock’s previous high was on August 9 at $ 280.47. Thus, in the last three and a half months, it has increased by more than 13%. However, COIN stock went public in April and started trading at around $ 328 per share.

Hence, this shows the volatility of the COIN stock. Over time, as the value and adoption of crypto assets reflects the accelerated growth in internet adoption, the stock will likely grow in tandem. But investors should be fully aware that it will be a bumpy ride.

As of the publication date, Mark R. Hake does not own any titles mentioned in this article, either directly or indirectly. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.

Mark Hake writes about personal finance on mrhake.medium.com and run the Total Value of Return Guide, that you can consult here.


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