Is Coinbase a Good Investment?

OVERVIEW

Coinbase Global Incorporation is a company based in the United States. The company offers cryptocurrency trading services to individuals, companies, and governments around the world. It also allows individuals and companies to transact in cryptocurrencies as well. The company was founded in 2012.

Why You Should?

  1. Coinbase is a great growth play in an investor’s portfolio. The company continues to see rising demand for its cryptocurrency trading platforms and services as investors, companies, and individuals around the world start to transact, invest, and trade more crypto. This growth will benefit the company and its investors.
  2. At the moment, the company gets the most of its revenue from the trading fees of Bitcoin, the world’s most popular cryptocurrency. As Bitcoin continues to grow in popularity (and in price), the company will continue to see trading volumes rise, something that will benefit its financial results and investors in the company.
  3. Coinbase has also developed its platform in order to allow its users to trade other cryptocurrencies like Dogecoin and Etherum. As other cryptocurrencies continue to rise in popularity, Coinbase will be able to unlock new growth opportunities for itself and its investors.
  4. Coinbase, like other financial technology companies like Visa and Square, has a very profitable business model where it charges customers to trade cryptocurrencies. In the financial year of 2020, the company reported a profit of over 300 million dollars, something that is not expected for startup companies. This profitable business model will benefit the company and investors.

Why You Should Not?

  1. The company faces tough competition in the cryptocurrency and financial technology industry. Some of these competitors include Visa, Square, Robinhood, and many others. This competition might hurt the company and its investors in the future.
  2. More regulation in the cryptocurrency industry might hurt the company and its investors. Countries around the world, like China, have regulated or cracked down on the trading of crypto. The United States is looking to increase regulation and tax crypto as well. This regulation might hurt the company and its investors.
  3. Coinbase’s stock is tied to crypto prices, which are known to be extremely volatile. The higher the Bitcoin and other crypto prices, the more money the company can make per transaction. However, if these prices crash, it will hurt the company’s revenues and profits during that specific time period. This will hurt investors in the company as well.

MY OPINION

I think that Coinbase is a decent long-term investment due to its position as a good growth play, Bitcoin growth, other cryptocurrency growth, as well as a profitable business model. However, tough competition, negative impacts from regulation, as well as volatile crypto prices might hurt the company and its investors in the future.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.