Coinbase (NASDAQ: NASDAQ:COIN), the US-based cryptocurrency exchange, is grappling with a significant decrease in trading volumes and stock prices while exploring new revenue streams amid ongoing regulatory pressures and a challenging crypto market. As of Thursday, the company's shares are trading at $77.35, marking a sharp 77% decline over the past five years since its Nasdaq listing in April 2021, according to InvestingPro data.
The company has experienced a 52% year-on-year drop in trading volumes, negatively impacting its profits as transaction fees constitute over half of its revenue. The spot trading volume for Q3 2023 stood at $76 billion, marking a 12-quarter low, which has led to adverse price action for COIN stock. This trend reflects the broader struggles of the crypto market, characterized by falling prices and exchange collapses.
Coinbase's stock has seen significant recovery this year, surging nearly 120% from its all-time low earlier in 2023, as per InvestingPro metrics. Yet, the platform's earnings per share have been on a declining trend, and the company has not turned profitable over the last twelve months, as highlighted by InvestingPro Tips. Mizuho Securities anticipates a seventh consecutive quarterly decline for the company.
In response to these challenges, Coinbase is exploring alternative revenue streams. The company is considering shorting the crypto market as part of a hedging strategy and launching Base, its proprietary layer-2 blockchain for the Ethereum Network.
Coinbase is also focusing on global expansion efforts. The company recently secured an MPI license from Singapore's Monetary Authority and received approval from Bermuda's financial authority for perpetual futures trading. Its plans to acquire FTX Europe and break into the European derivatives market have been suspended due to regulatory hurdles.
InvestingPro Tips suggests that the company's stock price movements have been quite volatile, and analysts do not anticipate the company will be profitable this year. This information, along with hundreds more tips, can be accessed by subscribing to InvestingPro's premium services here.
The company's market cap stands at 18.04B USD, and it has a negative P/E ratio of -13.65, according to InvestingPro data. Its revenue for the last twelve months was 2580.23M USD, but it has seen a revenue growth decline of -55.34%. Despite the challenges, the company's 1 Year Price Total Return stands at 10.58%.
InvestingPro's fair value for the company is 52.59 USD, which is lower than the analyst targets of 80 USD. This discrepancy suggests that the company's stock might be overvalued, and potential investors should exercise caution.
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