Coinbase hits low as crypto crumbles. When does the exchange platform become a buy?

Coinbase Releases Third-Quarter Financial Results

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Coinbase Global (NASDAQ:COIN), the largest cryptocurrency exchange platform in the U.S., is on track to open Monday's trading below $100, setting a record trading ahead of an earnings report due out this week.

COIN currently finds itself down 70% from its IPO date a little over a year ago, dating back to Apr. 14, 2021. Moreover, the stock has also dropped 55% in 2022 and is coming off the second worst single-day performance in its short history, plunging 12% during last Thursday’s Wall Street washout.

With the cryptocurrency market under pressure during 2022's risk-off trade, when will COIN become a buy?

Crypto’s Collapse

COIN has suffered significantly as cryptocurrencies like Bitcoin (BTC-USD), Ethereum (ETH-USD), Litecoin (LTC-USD), Solana (SOL-USD), and Dogecoin (DOGE-USD) have each fallen more than 20% on the year.

Year-to-date price action, as of late last week: Bitcoin -24.9%, Ethereum -28.6%, Litecoin -26.7%, Solana -54.5%, and Dogecoin -23.5%.

Bitcoin has fallen to a two-month low, dropping below the $35K watermark. In Monday's early trading, BTC-USD has approached $33K.

COIN has attracted heavy interest from retail traders, with a large share of its ownership coming from that sector of the market, rather than institutional holders. The largest position shareholders of COIN come from the retail public market, as they represent 36.5% or $9.26B of market value.

Meanwhile, COIN has faced other pressures from the financial market besides the crypto market slump. The firm also recently watched $700M worth of Bitcoin leave the firm for a cold wallet.

Is COIN a buy?

Even with its recent decline, most Wall Street experts still hold a bullish view on Coinbase (COIN). Of the 25 analysts tracked by Seeking Alpha, three-quarters of them label the crypto exchange with a Strong Buy or Buy rating. See analyst breakdown below:

While the majority of Wall Street remains bullish on COIN, there are some signs of dissent. As the graphic shows, two analysts list the firm as a Sell or Strong Sell. Meanwhile, COIN’s price target was recently lowered by Mizuho to $135 from $150 as the firm maintained its Neutral rating.

At the same time, quantitative measures suggest investors should approach COIN with skepticism. Seeking Alpha's Quant Ratings imply a Sell. COIN gets high marks for profitability, but growth and momentum both earn an F. The stock receives a C for valuation.

For a bearish look at the stock, Seeking Alpha contributor Skeptical12 outlines how COIN’s business model of charging very high fees to retail traders is not sustainable. For a more optimistic take, turn to fellow contributor Cryptonomics, who suggests that Coinbase Global can double thanks to NFTs alone.

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