Last Thursday Coinbase announced that it’s going public. If you’re unfamiliar with Coinbase, along with Kraken and Binance, it’s one of the largest crypto exchanges! Many people speculate that it’s going to be the largest IPO of 2021. After Fidelity’s BTC fund, and its partnership with BlockFi to provide BTC-Backed loans, Coinbase’s IPO is another event bridging the gap between cryptocurrencies and traditional finance.
Valuation
In a funding round in 2018, Coinbase was valued at $8bn, and since the, the company’s value must have increased due to both the surge in crypto prices, an increase in the price of most tech stocks, along with the increasing number of investors interested in BTC. Moreover, the stock market is at an all time high, which makes investors even more willing to put their money in untested products. Finally, CB is one of the few tech companies that are already profitable! Tesla wasn’t profitable at the time of the company’s IPO and this is the case with most tech companies.
Is Coinbase a Buy?
This brings us to the main question when it comes to stocks and stock videos. Should you buy the stock? Will coinbase be the new tesla? Will you 2x, 5x or 10x your money? Before I answer this question I should point out that I’m not a licensed professional, that this channel is for entertainment purposes only, and that you should always do your own research when it comes to investing.
Are you Bullish on Crypto?
The answer to this question largely depends on your attitude towards bitcoin and cryptocurrencies in general. If you’re a Bitcoin bull, and you believe that BTC will go up, that more people will start investing in Crypto, and that more companies will start accepting Crypto payments, then investing in Coinbase stock would be the next logical step.
Competitive Advantage
However, there are more factors to take into account when investing in a company, even in the case of coinbase with cryptocurrencies holding such immense potential. Does this company have a competitive advantage? Can it do something that other companies can’t? To answer this question, although there are a number of other platforms that have lower fees, or provide more options than coinbase pro, coinbase, in my view, is still the best platform to buy crypto for new investors. That being said, I believe that by 2025, a number of other platforms will have gone public, with robinhood being one such example.
Price
Another thing to consider is the price. Again, as with any company, you should make sure that the stock is priced at a fair value. I do expect a lot of speculation to drive up coinbase price, especially due people having easier access to trading via platforms like Robinhood. And since we don’t currently have any information about the price I can’t say whether Coinbase will be a buy or not. The fact that it’s an already profitable tech company is always a plus, and I would buy if it’s priced at a P/E ratio of up to 30. I realise this is a huge bet, but it’s also a limit. Obviously this could change as new information comes out.
Let me know what are your thoughts on the Coinbase IPO, and if you enjoyed the article and the video, please give them a thumbs up!
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