Is Coinbase making money from Cryptocurrency?
Interestingly, Coinbase Global Inc. (NASDAQ: COIN) is making some money from cryptocurrency transactions. However, Coinbase is making less money than earlier this year.
For example, Coinbase (COIN) reported a quarterly gross profit of $1.115 billion and a quarterly operating income of $291.81 million on 30 September 2021. However, the quarterly gross profit fell from $1.893 billion and the quarterly operating income fell from $874.73 million on 30 June 2021.
Notably, Coinbase’s quarterly revenues fell from $2.228 billion on 30 June 2021 to $1.312 billion on 30 September 2021. Yet Coinbase’s revenues are still growing at an astounding rate.
For example, Stockrow estimates Coinbase’s revenues grew by 316.51% in the quarter ending on 30 September 2021. Incredibly, Strockrow estimates Coinbase’s revenues grew by an astounding 1,095.39% in the quarter ending on 30 June 2021.
How big is Coinbase?
Thus, Coinbase (NASDAQ: COIN) grows at an incredible rate, but how big is Coinbase?
Strangely, Statista estimates Coinbase is the sixth largest cryptocurrency exchange. To elaborate, Coinbase processed $4.62 billion in transactions on 22 November 2021. In contrast, Statista calculates the largest cryptocurrency exchange Binance processed $31.79 billion in transactions on 22 November 2021.
However, data shows Coinbase has an enormous platform. For example, Coinbase claimed to have over 73 million verified users in over 100 countries in December 2021. Coinbase claims to have processed $327 billion in transactions in the third quarter of 2021. In addition, Coinbase claimed to have $255 billion in assets on its platform in December 2021.
Coinbase is capable of long-term growth. Statista estimates the number of verified Coinbase users rose from 23 million in the first quarter of 2018 to 43 million in the fourth quarter of 2020.
How Much Money is Coinbase making?
Interestingly, Coinbase’s cryptocurrency exchange generates cash. For example, Coinbase (COIN) reported quarterly operating cash flows of $3.412 billion on 31 March 2021 and $3.983 billion on 30 June 2021. However, the quarterly operating cash flow fell to $342.05 million on 30 September 2021.
Impressively, Coinbase reported quarterly ending cash flows of $8.306 billion on 31 March 2021 and $5.052 billion on 30 June 2021. The quarterly ending cash flow fell to $1.982 billion on 30 September 2021.
Coinbase Generates Enormous Amounts of Cash and Debt
Hence, Coinbase (COIN) can generate enormous amounts of cash. However, Coinbase is also borrowing enormous amounts of cash. For example, Coinbase reported quarterly financing cash flows of $1.375 on 30 June 2021 and $1.9759 billion on 30 September 2021.
Consequently, Coinbase’s total debt grew from $3.952 billion on 31 December 2020 to $6.313 billion on 31 March 2021. The total grew again to $10.375 billion on 30 June 2021 to $12.190 billion on 30 September 2021.
Impressively, Coinbase’s cash and short-term investments grew from $1.142 billion on 31 December 2020 to $2.116 billion on 31 March 2021. The cash and short-term investments grew from $5.42 billion on 30 June 2021 to $6.46 billion on 30 September 2021.
What Value Does Coinbase Have?
Thus, Coinbase Global (COIN) is accumulating enormous amounts of cash and debt as grows. Hence, I consider Coinbase an excellent growth stock, but what value does it have?
Coinbase’s value is growing fast. For example, the Total Assets grew from $5.855 billion on 31 December 2020 to $10.201 billion on 31 March 2021. The Total Assets grew from $15.790 billion on 30 June 2021 to $18.454 billion on 30 September 2021.
One person who is ignoring Coinbase’s growth is Mr. Market. For example, Coinbase’s share price fell from $328.28 on 14 April 2021 (IPO day) to $238.05 on 20 December 2021. Therefore, Mr. Market thinks Coinbase’s growth is unsustainable. Notably, the financial numbers justify Mr. Market’s belief.
I still think Mr. Market still grossly overvalued Coinbase at $238.05 on 20 December 2021. However, I think Coinbase is a cash rich company that could experience enormous growth for years to come.
Coinbase will Experience Enormous Growth
I think Coinbase (COIN) will experience enormous growth because cryptocurrency is experiencing incredible growth. For instance, Statista estimates the Total Market Capitalization of all Cryptocurrency grew from $548.35 million on 9 December 2020 to $2.754 trillion on 17 November 2021.
Interestingly, the Total Cryptocurrency Market Cap was just $15.41 billion as recently as 21 December 2016, just five years ago. Hence, cryptocurrency is experiencing incredible growth that shows no sign of slowing or ending.
I think Coinbase will keep growing with Cryptocurrency. However, I advise investors to avoid Coinbase because Mr. Market grossly overprices. Instead, I advice investor to stay away from Coinbase until it falls to a realistic price. Unfortunately, I cannot tell what a realistic price.
