Coinbase Global Inc. (NASDAQ:COIN) Stock: Is It a Strong Buy at $157.28?
Coinbase (NASDAQ:COIN) has seen significant volatility in recent months, with the stock dropping substantially from its peak levels, but recent developments, including its strong financials and growing institutional adoption of cryptocurrency, make it an attractive buy for long-term investors. Currently priced at $157.28, COIN is down from its highs, but this pullback may present an opportunity for investors looking to capitalize on its growth potential as the cryptocurrency market matures. Let’s dive into the key factors influencing Coinbase’s stock and whether it’s a good time to invest at this price.
Coinbase's Recent Financial Performance
In 2024, Coinbase demonstrated impressive revenue growth. Despite a rough crypto market environment, the company generated $6.29 billion in revenue, up from $1.28 billion in 2020, representing an adjusted CAGR of 31.3%. Net income for 2024 surged from $322.32 million in 2020 to $2.58 billion, with an adjusted CAGR of 22.4%. Free cash flow (FCF) also increased from $283.64 million to $2.56 billion, reflecting a 17.4% annual growth.
Despite these gains, Coinbase is highly dependent on the volatility of the cryptocurrency market, particularly Bitcoin. In 2024, more than 95% of the company's revenue came from transaction fees, with 32% of that coming from Bitcoin transactions. This reliance on the performance of Bitcoin and other cryptocurrencies is a double-edged sword—while it allows for rapid growth during bull markets, it also exposes the company to significant downside risk during market corrections.
Is the Current Price of COIN an Attractive Entry Point?
Currently trading at $157.28, Coinbase’s stock is significantly undervalued compared to its previous high of $350. The P/E ratio has dropped from 42.49 to 16.59, suggesting that the stock is now more attractively priced for value investors. The P/S ratio is currently 7, a more reasonable level compared to the elevated valuation it saw at its previous highs.
Despite a potential downside risk given the cyclical nature of cryptocurrency markets, Coinbase’s future growth prospects remain strong. The company has made significant strides in diversifying its revenue streams, with subscription and services revenues increasing 64% YoY to reach $2.3 billion. This diversification will help mitigate some of the volatility inherent in the crypto trading business.
Additionally, Coinbase’s institutional business is expanding rapidly, with institutional assets under custody from ETFs reaching $93 billion in 2024, up from $346 million in 2023. The adoption of cryptocurrency ETFs has further fueled institutional interest in digital assets, positioning Coinbase as a key player in this space.
The Crypto Market and Regulatory Developments
The overall crypto market continues to show signs of growth, with Bitcoin projected by analysts to reach $160,000 in 2025. This could lead to explosive trading volume growth and further gains in Coinbase’s cryptocurrency holdings. Additionally, Coinbase is well-positioned to benefit from the continued institutional adoption of cryptocurrencies, as it serves as the custodian for many of the new crypto ETFs launched in the past two years.
Regulatory clarity is another critical factor for Coinbase’s future growth. The recent news that the SEC case against Coinbase has been dropped reduces the company’s risk of facing regulatory hurdles that could impact its ability to offer services. This regulatory relief is expected to provide a clearer path for Coinbase to continue its operations without the looming threat of legal battles.
Valuation of COIN: A Look at P/E and P/FCF Ratios
At its current price, Coinbase is trading with a Forward P/E ratio of 18.5, indicating that the market is pricing in a decline in earnings. However, with the crypto market set to recover and institutional adoption increasing, this multiple seems too low. Compared to peers like Robinhood (HOOD), which trades at a P/E of 34 and a forward P/E of 28.3, Coinbase is undervalued, especially given its higher growth prospects and stronger market position.
The P/S ratio of 7 is also attractive compared to its competitors, and when adjusted for Coinbase’s net cash position, the P/E ratio drops to 13.3, further highlighting the company’s undervaluation at the current price.
What Are the Risks to COIN?
Despite its attractive valuation, there are significant risks to consider. Coinbase remains highly dependent on the performance of cryptocurrencies, particularly Bitcoin. If the market experiences another extended bear market, Coinbase could see a sharp decline in transaction revenues. Additionally, increased competition from other crypto platforms, as well as potential regulatory changes, could negatively impact Coinbase’s future growth prospects.
The company’s debt levels have also been rising, with long-term liabilities increasing from $83 million in 2020 to $4.32 billion in 2024. While the company generates significant free cash flow, it will need to continue managing this debt effectively to avoid putting pressure on its long-term financial health.
Should Investors Buy COIN at $157.28?
Considering the current valuation, strong growth prospects, and the increasing institutional interest in cryptocurrencies, Coinbase (NASDAQ:COIN) is an attractive buy at $157.28. While there are risks associated with its reliance on cryptocurrency market cycles, the company’s expanding subscription business, strong cash position, and regulatory relief make it a solid choice for long-term investors. Coinbase is undervalued compared to its peers, and its growth trajectory suggests that the stock has significant upside potential.
For more insights into Coinbase and its insider transactions, visit Coinbase Insider Transactions.
Conclusion: Strong Buy for Coinbase (NASDAQ:COIN)
With Coinbase (NASDAQ:COIN) currently trading at $157.28, it is well-positioned for long-term growth. Despite short-term volatility and risks related to cryptocurrency market cycles, the company’s strong market position, increasing institutional adoption, and diversification into subscription revenues make it a solid investment. With a Forward P/E ratio of 18.5 and a significant cash position, COIN presents an attractive entry point for investors looking to capitalize on the ongoing growth in the cryptocurrency market.
