Many investors are looking to gain exposure to cryptocurrency without buying crypto directly. One option is through Coinbase stock, which is a centralized cryptocurrency platform founded in 2012, a dinosaur in crypto terms. In this article, we will take a closer look at Coinbase, its revenue streams, and whether its stock (COIN) is a good investment for the more risk averse investor.
What Is Coinbase?
Let’s take a look at one of the oldest cryptocurrency exchanges that remains relevant to this day – Coinbase. This exchange and broker serves both retail investors and traders, as well as major financial institutions. Its primary offering is its exchange, where users can buy and sell cryptocurrencies such as Bitcoin, Ethereum and 240 other cryptocurrency. Over time, Coinbase has expanded its variety of products and services, including interest-earning products, derivatives, credit cards, lending services, an NFT marketplace, and their new layer 2 offering, Base. Additionally, for institutional customers and high net worth individuals, Coinbase offers crypto custody services that securely store and insure large quantities of crypto assets.”
How Does Coinbase Make Money?
Coinbase generates most of its revenue from cryptocurrency transactions made on behalf of its users. The remainder of its revenue is driven by what the company describes as “subscriptions and services,” with blockchain rewards and fees from custodial accounts being the primary contributors.
During the peak of crypto adoption, Coinbase generated a net income of $840 million, and a year later, the crypto exchange reported $629 million in revenue. For Q1 2023, the company has projected subscriptions and services revenue of $300 million to $325 million, along with restructuring expenses of approximately $150 million.
Is Coinbase Stock a good investment?
The math is simple: when the bull market returns and cryptocurrencies are traded on a larger scale, more traders will find their way to exchanges. Price predictions for Coinbase cannot be made with certainty, but we can think about the potential effect of increased interest in cryptocurrency once it skyrockets again.
However, investors should always consider the potential risks and rewards of investing in a growth stock in the cryptocurrency space. While Coinbase has a strong brand and reputation in the industry, it faces competition from other exchanges and is subject to market fluctuations.