On February 24th, Coinbase Global, Inc. (NASDAQ: COIN) reported its fourth quarter financial results. The company saw Q4 revenues come in at $2.5 billion, of which $2.3 billion was transaction-based revenue and the other $213 million was subscription revenue.
The company noted that of the $2.3 billion in transaction revenue, $2.2 billion was all retail-based, up 114% from the third quarter, due to higher crypto prices as well as volatility. Institutional transaction revenue was $90.8 million, up 34% from the last quarter. The weighted average institutional transaction fee declined in the fourth quarter compared to the third quarter. They say that the majority of the transaction revenue came from market makers.
The company saw full year 2021 revenues of $7.35 billion, of that $6.8 was transaction revenue and $517 million was subscription revenue. This is up from $1.1 billion and $45 million in transaction and subscription revenue in 2020, respectively.
The company saw total assets on the platform grow from $90 billion in 2020 to $278 billion in 2021, with it being a 50/50 split between retail and institutionally held capital. Most notably, the company is now seeing a more diverse percentage of holdings, as at the end of 2020 the companies assets on the platform were 70% Bitcoin, 13% Ethereum, 13% other crypto, and 4% fiat. Comparatively, holdings are now 40% bitcoin, 25% Ethereum, 31% in other crypto-assets, and 4% fiat.
The company saw trading volume of $1.67 billion in 2021, up from $193 million for all of 2020, with the institutional trading volume being $1.12 billion and $525 million being retail.
Coinbase currently has 24 analysts covering the stock with an average 12-month price target of US$317.85, or an 80% upside to the current stock price. Out of the 24 analysts, 7 have strong buy ratings, 11 have buy ratings, 5 have hold ratings and 1 analyst has a sell rating on the stock. The street high sits at US$600, which represents a 240% upside.
In Canaccord’s fourth quarter review, they reiterate their buy rating but lower their 12-month price target from US$342 to US$275, saying that the company continues to be a good proxy play for Bitcoin. They add that “it is clear to us that the broader ecosystem being built around the blockchain is not just slowing down but is accelerating in its evolution.”
They believe that the most boring part of the investment thesis for Coinbase is actually Bitcoin and that the important thesis is that there will be innovation, “materially broader and wider than the leading digital asset itself.” They say that the company stock has not decoupled away from the Bitcoin spot price yet despite all the business model expansion happening at the business. Because of this, they believe that Coinbase remains “an attractive story for those that want to buy it on spot price weakness as the company continues to expand, diversify and gain share against the backdrop of a potentially hyper-growth TAM.”
Canaccord offers a few key takeaways from the quarterly presentation. The first being the company’s increased trading volumes in the fourth quarter shows, “the potential of this business model.” They note that the company gained market share in 2021 despite the sector seeing increased competition. Coinbase grew its trading volume 850% year over year, which is higher than the crypto spot markets 750% year over year increase.
The other takeaway is that the company is seeing higher engagement with trading volumes growing, resulting in a 47% increase in trading and services revenue. The company reported 32% of MTUs were using investment and non-investment products compared to 22% at the end of 2020.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
