Coinbase’s Q1 performance has been under my radar, and here are my thoughts!
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Let me begin with the profits of Coinbase:
They have had one of their best quarters financially, bringing in a net income totaling 1.2 billion dollars. Not only is that an insane amount of money but also their earnings per share (EPS) was $4.40 which is equally mind-blowing.
But wait till you hear this – just through the increase in value alone on their crypto assets they made about 650 million dollars! These guys hit it big time.
Now let us move onto market conditions; during the first quarter, bitcoin did really well increasing by more than 34%. That’s a huge leap! CoinDesk 20 Index (CD20) followed closely behind with an approximate rise over 17%, so no wonder Coinbase thrived off positive trends within these markets.
What truly surprised me, however, were the reactions of the analysts. Both Canaccord Genuity and KBW increased their price targets for Coinbase. Canaccord now believes that shares could climb to $280, while KBW upped their target to $240. That’s a pretty optimistic outlook! It seems these analysts see great things on the horizon for Coinbase.
But then there’s transaction revenue growth to consider. According to Canaccord Genuity, consumer and institutional transaction revenues grew 101% and 133%, respectively, from the prior quarter. Now that is some impressive growth! More and more people seem to be hopping onboard — both retail customers and institutions.
But it wasn’t just the numbers themselves that got me excited; it was what they meant for other areas of potential growth too.
JMP Securities mentioned a few things in its note that piqued my interest here. They talked about Coinbase smart wallet functionality, Coinbase Prime and broader international expansion possibilities for the company. The idea of this US-focused business broadening its horizons is thrilling indeed!
Also, there is Coinbase's Basechain which is a layer-2 blockchain. This might change everything! If Coinbase manages to move cheap transactions through the base, it can cement its status as an industry leader. That’s definitely one thing to watch out for.
However, it’s not all sunshine and rainbows. There are concerns around USDC balances too. KBW said that they are worried about how quickly USDC balances are growing and that the growth may be unsustainable in their view; this is valid considering how volatile things can get in crypto so we should always keep our feet on the ground.
All in all, I am very positive about what lies ahead for coinbase. Certainly there remain risks and unknowns but that comes with any investment in this space; plus given coinbase’s stellar Q1 performance, it’s hard not to feel excited about what could be next?.
Posted Using InLeo Alpha