Coinbase Stock: Is It the Right Time To Buy?

With news of Coinbase’s IPO highs, one question is on investors’ minds: “How well did it do in the first quarter of 2021?”

Depending on how well your investments did in Q1 2021, investing in Coinbase stocks, or COIN could be a great opportunity to diversify your portfolio. This is especially true if you have not ventured into the cryptocurrency world.

While Coinbase is not a cryptocurrency, it is a platform for which investors can buy, sell, and store their crypto. 

But investors beware; this company is tied directly to cryptocurrency and acts as a double-edged sword. Learn more about Coinbase and let us help you decide if their stock is a good investment for you. 

What Is Coinbase?

Started back in 2012, Coinbase is an app for investors to exchange cryptocurrencies, such as bitcoin, litecoin, and dozens of others. 

For those who have not read up on them, cryptocurrency, or crypto for short, is a form of digital currency or virtual currency. It can be traded for goods and services online or even exchanged for paper currency. 

So, how does Coinbase make money? Coinbase charges users a brokerage fee and exchange fees. Similar to a bank holds your finances, Coinbase will store user funds. Coinbase also decides which crypto assets to list, as a major stock exchange would. 

Recently, on April 14, 2021, Coinbase became a public company. Now, you have an opportunity to invest in this cryptocurrency trading platform. 

Not only can you buy and sell crypto on Coinbase, but you can also use it to convert one type of crypto into another. Along with that, you can use Coinbase to sell or receive cryptocurrency from other people. 

So, should you invest in this crypto giant? Let’s break down some of the information found in Coinbase’s SEC filing to gain a better understanding.

Coinbase Risk

Because Coinbase is a service based on buying and selling cryptocurrency, it carries more than a few risks. For one, cryptocurrency has had a rocky history, to say the least. Here are a few risks to consider before investing in Coinbase stocks.


You may have seen or read articles over the past years discussing how the price of some cryptos surging or plummeting. This makes predicting the value of any cryptocurrency nearly impossible. Since Coinbase deals directly with crypto, it’s clear to see that it carries similar risks. 

Future Regulations

One of the most attractive parts about owning, buying, and selling crypto is that it is not subject to extensive regulations. However, as it has become more popular, crypto has drawn more attention from governments. Currently, cryptocurrency trading companies, such as Coinbase, already face regulations and evolving laws that can affect their operation.

Inflated Popularity

According to Coinbase’s SEC filing, at the end of 2020, they had about 43 million users. However, a closer look at the number shows that this doesn’t accurately reflect how many people use it for transactions.

For example, only about 6.5% of Coinbase users used the platform for crypto transactions. If that small number of users who make regular transactions gets any smaller, Coinbase could have a major problem on its hands. 

Coinbase vs. Bitcoin

Are you looking for a platform that trades crypto? Then you may want to know the difference between buying and selling crypto on Coinbase vs. Bitcoin.

As previously mentioned, bitcoin transactions make up a large share of Coinbase transactions. So your first question might be, “why not buy bitcoin directly from Bitcoin?”

Well, the advantage of using a service like Coinbase is that it’s new-user friendly. This means that those unfamiliar with crypto trading can learn the basics. Think of it as the popular stock trading apps out there, only for crypto. 

Another reason you could go with Coinbase over Bitcoin is that Coinbase is not directly tied to one type of crypto. In other words, Bitcoin, the company, can be negatively affected if a different cryptocurrency surges. 

On the other hand, Coinbase is positively affected by a surge in any cryptocurrency. The ability to invest in several cryptocurrencies is part of what makes Coinbase so attractive. 

Coinbase Stock Fundamental Analysis: Huge Earnings and Sales Growth

As the year progresses, you may grow interested in a Coinbase stock investment. As part of the company’s public offering, they offered a stock fundamental analysis to show what investors can expect from the rest of 2021. 

According to their report, Coinbase expects to grow to 56 million users, with $223 billion assets on their platform, which would represent 11.3% crypto asset market share.

Although it is too early to post numbers about their public offering, Coinbase showed off its profitability in 2020. At $1.24 per share, Coinbase generated $1.28 billion in revenue. 

Coinbase Stock Down 32%—Crypto’s Value Plunges $220 Billion 

The risks associated with cryptocurrency are real. On April 18th, the Wall Street Journal reported that crypto’s market capitalization shrank by $220 billion within an hour. 

This serves as another reminder of how volatile crypto can be. However, if you’re a crypto investor veteran, then you’re likely accustomed to these swings.

Take the volatility of crypto seriously. If you don’t like a highly volatile market, then investing in COIN stock is not likely a good idea for you. 

Is Coinbase Stock a Buy Right Now?

The above section may paint a grim picture for investors thinking about investing in Coinbase stock, but there are some key things to remember.

While the recent hit to crypto’s value is a glaring sign of the market’s volatility, you must keep in mind that volatility swings both ways. 

Crypto investors who’ve been doing it long enough can tell you about the ups and downs of the market over the past few years.

Another thing to consider is the growth of Coinbase’s user base. Although the actual number of people using Coinbase’s service regularly remains low, the total number of verified users is expected to grow, according to their own report. 

If you are asking yourself if now is the time to invest in Coinbase stock, it’s better to ask yourself how high your risk tolerance is. 

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