Bitcoin Hoarding Sinks Coinbase?
Great Ones, Coinbase Global (Nasdaq: COIN) had the crypto world in an uproar today. Well … part of the crypto world, that is.
As you probably already know, Coinbase is the world’s second-largest cryptocurrency exchange, averaging more than $8 billion in crypto volume per day.
That’s still a far cry from Binance’s $36 billion per day, but Coinbase is still one of the new kids on the block. (Please don’t go, Bitcoooin! It would ruin my whole world…)
In its quarterly report, Coinbase reported earnings of $1.62 per share on revenue of $1.3 billion. Not too shabby, right?
Not too shabby until you realize that Wall Street wanted earnings of $1.81 per share on revenue of $1.6 billion. That’s not just an “Oh! Your targets are too high!” kinda miss. That’s an outright whoosh.
During the same quarter, popular cryptos like bitcoin and Ethereum hit fresh all-time highs, while Dogecoin and Shiba Coin both continued to be extremely popular with speculators.
Here’s the weird thing: You’d think that with cryptos being so popular during the quarter, Coinbase would’ve seen higher revenue.
Analysts certainly expected better results and likely banked on the same logic. Rising crypto popularity should increase Coinbase’s revenue dramatically.
But that didn’t happen … as you can clearly see from Coinbase’s report.
So, what’s going on? Why isn’t Coinbase’s revenue rising as fast as crypto prices — especially bitcoin?
The problem lies with how Coinbase gets its revenue. About 90% of Coinbase’s revenue comes from transaction fees. According to the company’s website:
In other words, the larger the order, the more money Coinbase makes.
The more actively traded cryptos like Dogecoin and Shiba will see more coins change hands, but the dollar size of the order is gonna be pretty small. That means lower revenue for Coinbase until Doge and Shiba “go to the moooon!” as hodlrs say.
What this means is that Coinbase makes more money on big trades … like bitcoin trades. Buying one of those bad boys today would set you back a whopping $68,000, more or less — likely more.
Bitcoin’s value rallied sharply last quarter and is still on the rise today. But if the most popular crypto is in rally mode, why isn’t Coinbase getting much revenue out of that popularity?
I have a theory, Great Ones, and it spells trouble for Coinbase and any investors looking to use COIN stock as a proxy for crypto. Hear me out…
Instead of becoming a true alternate currency to fiat currencies like the U.S. dollar, bitcoin has instead become more like gold. In fact, bitcoin has become synonymous with gold as a hedge against inflation. It’s become a crypto store of value.
Now, Great Ones … what do you do with gold? Do you spend it? Of course not. Who walks around with gold in their wallets these days? They don’t even take gold at Renaissance fairs, which seems like a major oversight to me. But I digress…
So, if bitcoin is becoming more like gold in that it’s traded and exchanged less frequently than, say, currencies that are spent on a daily basis … it only stands to reason that there will be fewer overall transactions. And that, class, means less revenue for Coinbase.
In short, Coinbase makes its revenue from transactions. Bitcoin is seeing fewer and fewer transactions because investors are hoarding this “digital gold” like cyber-Smaugs. And they’re hoarding more and more bitcoin now due to inflation concerns.
The bottom line is that for Coinbase to hit analysts’ revenue targets going forward, the company either needs a new higher-value crypto to see a lot more transactions … or it needs inflation fears to subside so that the bitcoin flows more freely.
If I actually owned COIN stock, I’d be in holding mode right now.
It’s still the No. 2 crypto exchange in the world. But I wouldn’t go out of my way to buy more COIN until inflation tensions ease up a bit and investors quit hoarding bitcoin.
Going: Situation FUBAR
If you really needed more proof that Wall Street’s totally forsaken fundamentals … because we totally didn’t have enough proof of that disconnect already … get ready. Great Ones, it’s dead horse-beating day — and you’re up to bat.
Enter Fubo TV (NYSE: FUBO), startup sports streaming service and wannabe online-betting extraordinaire. Judging by the 17% sell-off its latest report prompted, you’d think Fubo live-streamed the apocalypse. But that’s far from the case here.
Subscriber count grew 108%, and subs are watching FUBO more than ever. Viewership hours reached a record 284 million hours watched last quarter. Total revenue? Up 156%, handily topping estimates. Ad revenue in particular — the streaming world’s sweet, sweet lifeblood — shot up 147%.
All of these figures are up year over year and show a relatively healthy streamer that’s no longer the spring chicken of the online-TV world. It’s no Disney+ … but I’ll take it. FUBO is also hitting its subscriber goals, which is the one thing Wall Street seemingly wants more than anything (just ask the other streamers).
Yet, all that didn’t make a dent to dam FUBO’s deluge. Wall Street simply couldn’t handle that Fubo had the gall to miss earnings expectations, reporting a loss of $0.74 per share versus estimates for a $0.61 per-share loss.
Never mind that Fubo narrowed that loss from a whopping $6.20 per share last year. And never mind that Fubo passed 1 million subs — we’re being negative today, you hear?
Going: A Glitch In Nio’s Matrix
Oh great, Nio reported earnings. Time for Mr. Great Stuff to pull out the ol’ Matrix meme. Nio’s the chosen one. You’re so funny…
Wow, way to take the steam out of my sails there. I’ll just stick to the no-frills fact-reporting then, thank you very much.
Earnings came in at a per-share loss of $0.06, while analysts expected a loss of $0.10 per share. Revenue more than doubled year over year and reached $1.52 billion, topping targets for $1.47 billion. But ever since Nio unnerved investors with its vehicle sales slowdown last week, the market’s been waiting for another chance to sock it to Nio.
Disappointing guidance? Good enough, say no more! NIO shares traded all over the place once the company said that next quarter’s revenue would land between $1.46 billion and $1.57 billion — not the $1.75 billion analysts wanted. Semiconductor shortage shmemiconductor shortage … Wall Street wants it’s revenue! Now!
Nio ended the day off its lows, however, as investors realized exactly what we told you last week: Nio is actively expanding and growing its business, pouring cash into its manufacturing capabilities to better tackle the European market.
Remember, it’s this manufacturing restructuring that will help Nio meet its ever-rising demand in future quarters … even if Wall Street sometimes forgets that investing in yourself is a thing.
Going: Talk About DoorDash Destruction
You say you trade on fundamentals, well you know … you don’t wanna work too hard.
You say you want some value stocks, well you know … DoorDash (NYSE: DASH) has no income.
So, when you go buying stock that drops $8.1 bil, you ain’t gonna retire a millionaire anyway! You know it ain’t gonna be … all right … all right.
“Ain’t gonna be” … ooh, we’ll be hearing from honorary proofer Ken B. about this one.
Anyway, DoorDash — the so-called revolutionary delivery-for-hire company that’s never made a profit. Like … ever. DoorDash figured now’s a good time to drop $8.1 billion and snatch up international food delivery company Wolt — a decision that sent DASH shares soaring 14% today.
Hmm, so a money-losing monstrosity decided to scoop up another potentially unprofitable international business? And the market’s applauding its decision? That sounds about right.
Even the same analyst crowd who’s cheering on DoorDash’s buyout admits there’s “near zero insight into Wolt’s financials.” Isn’t this exactly the kind of uncertainty the market would punish into oblivion any other day?
It gets better … or worse: If analysts actually looked into DoorDash’s quarterly report, the company’s earnings losses keep mounting. But Wall Street pretended not to see that nastiness.
So, we have Fubo reporting bang-up earnings. Nio, while somewhat disappointing in the short term, reported signs of long-term brilliance … which is kinda why Great Stuff Picks is in it to begin with.
But no, no, none of those flourishing fundamentals matter anymore. Let’s cheer on this profitless delivery company that just spent $8.1 billion it doesn’t have.
Congratulations, Wall Street. You played yourself.
Oh hey, there you are! My favorite Great One. I was just gathering the answers to last week’s poll when you dropped in. I’m sure you’re rearing to hear the results that you definitely contributed to … right?
Right… This time last week, we asked if you’d ever bought a stock from the Great Stuff Picks portfolio. I know that you know there’s a portfolio lurking out there somewhere in the great beyond … even if 22.6% of you feigned ignorance.
Seriously though, if you’re new to our shenanigans, the only thing you need to know about the Great Stuff Picks portfolio is that I only update our portfolio … when I feel like sharing it.
Since catching a glimpse of the portfolio is rarer than a Bigfoot sighting, you should really start tuning into our rag more regularly. Cause just like that Son of Galleon mount in World of Warcraft, camping out and staying vigilant is the only way you’re ever gonna see this puppy.
What? It’s a free e-zine. You want fancy things like regular updates and to actually see the portfolio all the time? That stuff ain’t free, man. Though, keep tuning in on the regular. I’m planning on sharing it again soon.
So, grab your binoculars, get out your bait traps (Snickers should do the trick) and prepare to witness a rare Great Stuff Picks portfolio sighting. You’ll be glad you did.
Now that my shameless self-promotion is out of the way, let’s rattle off the rest of the poll results, shall we?
A whopping 67.7% of you said you not only bought one of our Great Stuff Picks but can’t wait for the next recommendation to drop. I’m right there with you, friend — and I’m glad these virtual pages have helped you make some money.
If you don’t mind, let me know how your position(s) are doing: GreatStuffToday@BanyanHill.com.
Finally, the remaining 9.7% of you said you only stick around for the memes. Or, in Ken B.‘s case, the musical references we make (and the ones we don’t). How’s that doctoral thesis on our lyrical inclusions going, Ken?
I appreciate your honesty, and I hope that, if nothing else, our memeage has made you laugh. Now, how about another question to wind down your Wednesday?
We talked ESG investing earlier in the week, and I’d like gauge your interest in this particular part of the market — you know, in case you want to hear more about it down the line.
If you’ve already bought into the ESG investing craze — or you simply can’t stand it — let us know in the poll below: