Coinbase stocks have finally gone live after a long tease period. We have now gotten the coin stock, COIN, trading on the NASDAQ. This launch was a massive event for the cryptocurrency market because it is a big achievement for cryptocurrency in the eyes of institutional investors who now buy big stocks.
Coin base will be the mega IPO of 2021; the initial listing valuation is thought to be around 100 billion dollars making it the biggest tech IPO in the past decade.
Coinbase chose the perfect time to debut their stock because the numbers are in for Q1 for 2021, and the numbers are insane. Coinbase did 1.8 billion dollars in revenue for Q1, which was 600 million more than the entire 2020.
Looking at the pros and cons of buying the Coinbase stock, Coinbase is one of the biggest exchanges in the world, a highly respected and highly profitable company. Owning a piece of Coinbase is like being a part of the crypto gold rush, and the good thing is that whether the market is going up or down, it does not matter, Coinbase makes money either way because their business is all about the transaction fees which happen to be some of the highest in the industry.
Another pro is that it is a stock which means that, unlike those governance tokens, when you buy the Coinbase stock, you are legally entitled to a piece of ownership of that company. With this, you can also put Coinbase into something like your retirement account if you wish; it could make Coinbase a very good long-term hold for cryptocurrency investors.
Another reason is that Coinbase will be one of the biggest investment vehicles for big money to get exposure to the crypto market without going and buying and holding the assets themselves.
Looking at the cons, Coinbase is a growth stock and not a dividend stock, which means that you only make money if the number goes up. But at a 100 billion dollar market capital, the upside is lesser when compared to other investment opportunities you may find in crypto or the stock markets.
Another reason is that when you buy into Coinbase, you are only buying deeper into the cryptocurrency market. Coinbase does not diversify away from the crypto market. It earns most of its revenue from the transaction fees on the exchange, so if the cryptocurrency market suffers a downturn, Coinbase is not completely immune to it.
Lastly, in terms of gains, there are better investment opportunities in the crypto market. If you are a profit maximalist looking for a better investment opportunity, you may have to look elsewhere.
At 100 billion dollars, Coinbase is somewhat expensive; it will go straight to being the 82nd biggest company in the USA; if it doubles in price after listing, it will be the 34th biggest company in the USA. There is no really a massive upside for this if you compare what you can do with a random altcoin.
