Coinbase *checks papers* overvalued

4 июл. 2022 г.

I started using Coinbase all the way back in 2013, it was the first crypto exchange that didn't feel like a siren song, and my overall experience with their service has been positive. Going public is the biggest mistake Coinbase could have made (dramatic OMG face thumbnail would go here)!

COIN business model is simple, they soak customers with fees. And it's great during a bull market.

$2 EPS in 2020
$16-ish EPS in 2021
2022, I’d say Coinbase is on track to loosing money.
*the values are as I recall them, I'd double check if I were you.*

Revenue relative to the assets, at one point reached 4%, well below that mark today.
Even at 150bps, Coinbase isn’t making money. Based on the metrics COIN has presented, revenues are dropping faster than they’re cutting costs. Eventually, I believe Coinbase will find a happy medium, but it’s current fees based business model isn’t sustainable long term.

In it’s current state I believe COIN is overvalued (at the time of writing price is at $49-ish).
I’d like to see COIN trading around 1 to 1.5 it’s Tangible Book Value, which, for the quarter ending in March 2022 is at $23.48 (1) and $35.22 (1.5). Stay tuned as to what will Coinbase’s Tangible Book Value be next quarter, mark your books for August 9th.

Another fire burning under Coinbase right now is share based compensation, keywords in that problem are buyback and dilution. I’ll leave it for another day, Tangible Book Value is enough material for a decent tinfoil hat.

This is my Thesis, targets are purely hypothetical based on my analysis.
This is NOT Investment and/or Trading Advice.

Happy Trades!

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