Alright, Coinbase (COIN) announces Q3 earnings this Monday, and I couldn’t be more bullish.
To start out, the company has been absolutely printing money, with a current P/E ratio of 33.50. If you take just their most recent Q2 earnings, their P/E ratio is 13.56. Compare that to any other rapidly growing tech stock, I’m talking Square, Snapchat, AirBnB and other “popular among youths” stocks with P/E ratios of 100+. Yes, this is largely in part to Coinbase absolutely crushing Q2 earnings, but at the rate things are going, I don’t think that earnings report was an anomaly.
According to multiple websites I found with a quick google search, Coinbase is now the most downloaded app on the App Store and second on the Play Store. I’ve seen the new ad campaigns all over the place, which is always a good indicator of a company becoming more established. With customer acquisitions skyrocketing and the crypto market as a whole reaching all time highs, I see no reason Coinbase can’t demolish earnings the same way it did last quarter, perhaps even harder. But this brings me to the one critique many have of $COIN: it follows the crypto market too closely. For example, if bitcoin goes on a run, you can expect $COIN to follow it, and vice versa. But this isn’t necessarily a bad thing, nor does it have to be permanent.
The crypto market as a whole has been on a tremendous bull run since its inception (for the most part of course), and with serious attempts at integrating crypto into day to day life, I don’t see this changing anytime soon. Bitcoin has dominated the crypto space, and much like $COIN, other cryptos have a habit of following the price of bitcoin. However, other cryptos are starting to emerge with rocketing market caps, each one making bitcoin a smaller piece of the overall pie. With alternative coins like diverging from bitcoin, the crypto space is likely to become more diverse as time continues, much like the stock market is today. This will hopefully make for a healthier, less dominated market that will be less volatile as a whole. So if bitcoin has a rough day, other futuristic magic internet money can cushion the blow if they’ve diversified the market enough at that point. Besides, bitcoin, despite having harsh swings, does majorly trend upward, so even if bitcoin stays at the top, $COIN following the crypto market might not be so bad.
So, to sum up what’s been stated, Coinbase has been growing rapidly, is extremely profitable, and has been majorly underestimated by investors across the board with a track record of demolishing expectations on earnings and customer acquisition expectations. The only caveat for some being that it follows the price of a volatile market too closely, which is hardly a bad thing given that market’s history in the long term is very green, and hopefully won’t be the trend for the stock forever anyways.
But do you want to know why I REALLY believe in Coinbase? Well, put on your tinfoil hats, because things are about to get fringe.
To start, why has Tesla recently become a trillion plus dollar company? Is it because of their profitability? No, their P/E ratio is over 350. Clearly it’s because of the prospect of what’s to come. The eventual decline of oil as the most environmentally conscious generation grows up and the world’s energy becomes renewable. Everyone drives a Tesla, and lives on a clean, smog free planet. When you buy into Tesla, you’re not just buying into a car manufacturer, you’re investing in the prospect of what’s to come, and what Tesla represents as a whole: a bright optimistic future, and a revolutionary macroeconomic change. So, if this is the case, what does that mean for Coinbase?
Well, I can see $COIN becoming a similar thing; a stock that not only is tied to a growing, healthy company, but as a way to buy into the overall long term trend of crypto becoming mainstream. Since Coinbase is the premier means of dipping your toes in the crypto seas, buying the stock means you see the value in the crypto market in the long term. $COIN could grow to represent the anticipation of the crypto market growing, just the same way I believe $TSLA represents the anticipation of an eco-friendly renewable future. In the same way, it paints a bright optimistic future: the death of banks as crypto rises and everyone races Teslas to compete in the annual Dogecoin Cup. And investors eat up investments that emulate a bright future like candy. Take weed stocks, the companies aren’t too great in their fundamentals, but, again, they represent a bright, utopian future for pot enthusiasts: weed being mainstream.
But Coinbase still diverts from these companies paving the way for a utopian future in one major way: IT PRINTS MONEY. So even if you don’t believe my philosophy that investors buy into companies because of what the perceived success of the company means as a whole (bright, utopian future on the horizon), the company is still phenomenal in its fundamentals.
I’ll be watching Monday’s earnings with my whole 6 shares (shallow pockets boohoo) and a bag of popcorn in hand, as I watch the next trillion dollar company climb to the moon.
This article was written by u/bryanblair4.
