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Coinbase (COIN) Q1 Revenue Slips, Is Now The Time To Buy?

Ollie Martin - AskTraders News writer
Ollie Martin trader
Updated 11 May 2022

Trade Coinbase Shares Your Capital Is At Risk

Key points:

  • COIN shares drop 19% premarket on weak Q1, miss on top and bottom lines
  • With BTC dipping under its ‘symbolic’ hold level, traders are shying away from risky assets
  • Coinbase should be seen as a long-term play on crypto volatility
  • Coinbase Alternatives

One of the most popular platforms for trading digital assets, Coinbase (NASDAQ: COIN), reported its first-quarter earnings after the closing bell on Tuesday. Any bullish sentiment is feeling the squeeze of high-growth tech stocks currently, with the NASDAQ officially entering bear market territory. It isn’t just tech that is feeling the sell-off, risky assets like cryptocurrencies have also fallen victim to heavy downtrends; in turn affecting sites like Coinbase in the process.

While analysts predicted an EPS of $0.91, Coinbase posted a loss of $1.98; hit hard by digital asset volatility. Similarly, revenue came in at $1.17B against $1.48B expected. With the company falling short on both top and bottom lines, investors might be worried. But due to the revolving, volatile nature of digital asset trading; this could just be temporary, and a minor blip on the wider bullish radar.

Also Read: Diversification Is the New ‘Buy the Dip’ 

The first few months of 2022 haven’t been kind to Coinbase stock, akin to its competition and the wider tech market as a whole. This, coupled with a dramatic drop in Bitcoin past the supposedly symbolic $30,000 level, doesn’t bode well for Coinbase, resulting in a drop in users as traders take their money to safer avenues. Retail monthly transactions fell to 9.2M from 11.4M in Q4, with total trading volume dropping to $309B from $547B last quarter. In turn, revenue fell 27% year over year, resulting in a net loss of $430M.

Crypto-savvy investors will be well aware that the last few months on selling might continue, but the volatility of digital assets shouldn’t be understated. Just like crypto is seen as a long-term investment, so should shares of Coinbase be. Also, the company is still spending at the rate of an early hyper-growth company, thereby pulling down the company’s bottom line.

The company’s decision to focus on expansion and diversification should benefit the exchange in the long run. COIN shares are currently trading at a premarket loss of 19% off the back of the poor earnings, but investors should bear in mind the long-term payoff.

Ollie Martin - AskTraders News writer
Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.