Cryptocurrency trading marketplace Coinbase (NASDAQ: COIN)
stock has plunged with the technology stocks and cryptocurrencies losing more than (-23%) in January 2022. The popular digital
app platform has grown tremendously in parallel with the explosion in cryptocurrency values and popularity. The name is synonymous with crypto markets which is great when they’re rising, but painful when they collapse. The Company has over $6 billion in cash and invests in products including NFTs, web 3.0, and crypto lending through its Coinbase Ventures investment arm. In addition to retail customers, Coinbase has grown its institutional
customer base north of 7,000 enterprises
. Since crypto markets operate around the clock, the Company collects spread and commission revenues around the clock 7 days a week. The World Bank expects crypto users to climb to over one billion in the next three years. Prudent investors seeking exposure in the premiere crypto marketplace can watch for opportunistic pullbacks in shares of Coinbase.
Q3 FY 2021 Earnings Release
On Nov. 9, 2021, Coinbase released its fiscal third-quarter 2021 results for the quarter ending September 2021. The Company reported earnings per share (EPS) profits of $1.62 versus $1.72 consensus analyst estimates, a (-$0.10) miss. Revenues grew of 315.7% year-over-year (YoY) to $1.31 billion falling short of the consensus analyst estimates for $1.58 billion. Monthly transacting users (MTUs) grew 252% YoY to 7.4 million. Trading volume fell to $327 billion versus $462 billion.
Conference Call Takeaways
CEO Brian Armstrong set the tone, “We've had another solid quarter, and this is to admit the volatility happening out there in crypto markets. We never know exactly what's going to be happening in this quarter in crypto, but we are seeing really strong and accelerating pace of crypto adoption globally. In the letter, we actually shared some insights on the pace of this adoption and how it mirrors that of Internet 25 to 30 years ago. And we looked at some third-party research which indicates that crypto users have doubled in the first half of this year, now over 200 million people in that growth is accelerating. So, what are going to focus on Coinbase? So, there's 4 main areas. The first is about products, we're a product-led Company, and we focus a lot on how we can improve the customer experience to get to a billion people accessing the crypto economy through our products every day. So how are we doing that? Well, we're investing in our core apps, the main retail app. We're also investing in our prime brokerage app for institutions. We're building Coinbase Cloud, which is our AWS like developer platform for any business out there that wants to build into the crypto economy. And we've been investing in new initiatives like in a few marketplace, in our direct deposit offerings. The second area is around customer service. So, you saw that we announced 24/7 phone customer support, which we're going to be rolling out next quarter. We're also investing in cyber liability. In midst of all this growth, we're very focused on maintaining adequate uptime for our apps and website in this unprecedented growth period.” He concluded, “And then lastly, we're focused on our policy and government relations, efforts, and regulation. And so this is continuing the tradition that Coinbase has had since the beginning of seeking out regulators, being the most profit game licenses, and actually being in educational resource to help educate around the world about how this industry can be something very positive for the world.”
COIN Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provide a precise view of the price action playing field for COIN stock. The weekly rifle chart peaked near the $368.90 Fibonacci (fib) level before plunging to the $188.30 fib before coiling. The weekly rifle chart downtrend has a falling 5-period moving average (MA) at $234.97 followed by the 15-period MA at $277.08. The weekly stochastic formed a mini inverse pup through the 20-band and weekly lower Bollinger Bands (BBs) at $161.46. The daily rifle chart formed an inverse pup breakdown with the falling 5-period MA at $217.02 followed by the 15-period MA at $230.96 with lower BBs at $187.84. The daily stochastic fell back under the 20-band. The daily market structure low (MSL) buy triggers on a breakout above $238. Prudent investors can watch for opportunistic pullbacks at the $176.31 fib, $166.42 fib, $157.51 fib, $144.87 fib, $129.68, $114.75, and the $105.07 fib level. The upside trajectories range from the $242.56 fib up towards the $345.25 fib level.
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