Is the cryptocurrency finally over? Which ticker you should look at first

Crypto-assets have seen a massive decline since the end of the 2021 highs. Coinbase Global (COIN) has fallen 78.5% so far this year due to the highly uncertain macroeconomic environment. Despite its poor finances, the company remains optimistic about its investments in decentralized finance and NFTs. But given the unfavorable analyst estimates about COIN’s finances, would it be wise to invest in the stock? Read on to learn our vision….

Financial Technology Company Coinbase Global, Inc. (COIN) offers retailers the primary financial account in the crypto-economy, a marketplace with a pool of liquidity for institutional cryptocurrency transactions, and technology and services that enable ecosystem partners to build crypto-based applications and securely accept payments with cryptocurrencies.

The highly uncertain macroeconomic environment driven by the Fed’s aggressive interest rate hikes and rising inflation has kept the stock market under pressure since the beginning of the year. All major cryptocurrencies and shares in companies whose businesses are dependent on cryptocurrencies were also not spared stress.

Due to the uncertainty, investors have dumped the more risky assets and chosen relatively safe, less risky assets. Major cryptocurrencies bitcoin and Ethereum have corrected 58.2% and 71.8% respectively this year. The negative market sentiments and the rapid declines in digital currency prices have affected COIN.

On June 14, 2022, COIN announced that they would lay off 18% of the total workforce. COIN chief Brian Armstrong said in an email: “We look set to enter a recession after a 10+ year economic boom. A recession could lead to a new crypto winter and could last for a longer period of time. is difficult to predict the economy or the markets, we always plan the worst, so we can run the business through any environment. “

COIN’s stock has fallen 78.5% in price so far this year and 78.1% over the past year to close the last trade at $ 54.24. It is currently trading 85.3% below its 52-week high of $ 368.90, which it reached on November 9, 2021.

But with the company working to improve operational efficiency, it can withstand the macroeconomic headwinds better than other crypto-based businesses. COIN’s revenues and earnings have taken a hit in the first quarter, which ended on March 31, 2022, when the total trading volume plummeted with retailers trading less due to rapidly falling prices for digital currencies.

COIN invests heavily in products such as Coinbase Wallet and Coinbase NFT to drive the next growth phase. While traders mainly use crypto assets for quick financial gains, COIN hopes that their products will create a system where crypto can be used for real transactions.

Here is what could affect COIN’s performance in the coming months:

Disappointing economy

COIN’s total revenue fell by 35.2% year-over-year to $ 1.16 billion for the first quarter ended March 31, 2022. The company’s operating loss was $ 554.46 million, compared to an operating income of $ 987.71 million. dollars.

Net loss was $ 429.65 million, compared to a net income of $ 771.46 million in the same period last year. In addition, the loss per share was $ 1.98, compared to an EPS of $ 3.05 in the same period last year. Besides, it is adjusted EBITDA fell 98.2% year-on-year to $ 19.68 million.

Adverse analyst estimates

Analysts expect COIN’s EPS and revenue for the 2022 fiscal year to fall by 153.7% and 48.5% year-over-year to $ 7.79 billion and $ 4.03 billion, respectively. EPS for the financial year 2023 is expected to remain negative.

Mixed valuation

When it comes to forward EV / S, COINs are 2.50x 7.2% lower than the 2.70x industry average. Similarly, its 3.26x subsequent 12-month EV / EBITDA is 64% lower than the 9.07x industry average. And the stock’s 2.30x forward P / B is 111.8% higher than the 1.09x industry average. In addition, its 3.01x forward P / S is 8% higher than the 2.78x industry average.

POWR rankings reflect bleak prospects

COIN has an overall D-rating, which corresponds to a sale in our POWR ranking system. The POWR ratings calculated by considering 118 different factors, with each factor weighted to the optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. COIN has an F rating for Sentiment, synchronized with its unfavorable analyst estimates.

It has an F rating for growth, consistent with its poor economy.

COIN is ranked # 127 of 156 shares in Software application industry. click here to access COIN’s assessments of value, momentum, stability and quality.

The bottom line

With the current uncertain macroeconomic environment, COIN is expected to face a decline in business. The company’s monthly transaction users (MTU) and total trading volume are expected to decline due to falling crypto prices and increased volatility.

However, the company believes that current market conditions are not permanent, and its investments in other products will drive growth as market volatility declines.

Given COIN’s disappointing finances and unfavorable analyst estimates, it may be wise to avoid the stock now.

How to do Coinbase Global, Inc. (COIN) Stack up against their peers?

COIN has an overall POWR rating of D, which corresponds to a sales rating. Therefore, you may want to consider investing in other Software Application shares with a rating of A (strong buy) or B (buy), such as Rimini Street, Inc. (RMNI), Commvault Systems, Inc. (CVLT), and Open Text Corporation (OTEX).

The COIN stock fell $ 54.24 (-100.00%) in pre-market trading on Wednesday. So far this year, COIN has fallen -78.51%, against an increase of -19.22% in the benchmark index S&P 500 in the same period.

About the Author: Dipanjan Banchur

Since attending primary school, Dipanjan has been interested in the stock market. This led him to take a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing new trends in the financial markets.

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