It’s rare for a stock that has surged over 300% since 2023 to still be regarded as a “must-buy” for growth investors. However, Coinbase Global (3.65%) is not your typical stock.
As a pioneering force in the cryptocurrency sphere, Coinbase is at the vanguard of a financial revolution, offering remarkable long-term possibilities. Here are three persuasive reasons why growth-focused investors should consider adding Coinbase to their portfolios today.
1. Simplified Access to Crypto Growth
The cryptocurrency landscape is vast and intricate, with thousands of cryptocurrencies being traded worldwide, making it difficult for investors to determine which ones will endure over time. The stark reality is that many of today’s cryptocurrencies, aside from a few established names like Bitcoin and Ethereum, might not stand the test of time or hold much value in the future. Nevertheless, this doesn’t negate the crypto asset class’s substantial growth potential.
Blockchain technology and digital assets have numerous future applications, ranging from decentralized finance (DeFi) to decentralized physical infrastructure networks (DePIN) and the tokenization of real-world assets. Instead of betting on individual winners, Coinbase offers a simpler, more diversified path to gain exposure to the entire crypto sector.
Coinbase’s business model extends beyond mere facilitation of cryptocurrency transactions. It derives revenue from a variety of crypto-based products and services, providing investors with exposure to the entire ecosystem.
Coinbase profits from trading volume on its exchange, but it is also involved in staking, stablecoin interest, custodial services, and its own blockchain—Base. This diversification enables Coinbase to capture value from multiple facets of the crypto market, making it a more secure, comprehensive way to invest in the sector’s potential growth.
2. A Transformative Journey
Coinbase’s business model has undergone significant changes in recent years. In 2022, the company reported losses exceeding $2.6 billion, primarily due to its dependence on transaction fees. During the crypto winter, when prices plummeted, trading volumes dried up, leading to significant revenue declines. At one point, more than 90% of Coinbase’s revenue was derived from transaction fees.
However, Coinbase seized this downturn as an opportunity to evolve. Since then, the company has diversified its revenue streams, reducing its dependence on the cyclical nature of crypto trading. Today, transaction fees account for about 65% of Coinbase’s revenue, with additional revenue now coming from staking services, stablecoin interest, custodial fees, and blockchain activities through Base.
This strategic pivot has stabilized Coinbase’s revenue, helping it withstand the inherent volatility of the cryptocurrency market. By decreasing reliance on a single revenue source and expanding others, Coinbase has become more resilient and better positioned to seize future market opportunities.
Further illustrating its transformation, Coinbase has streamlined operations by cutting costs by approximately 40% while expanding new revenue streams. The outcome is a leaner, more efficient business poised to thrive in both bull and bear markets.
3. An Ideal Buying Opportunity
Despite its impressive gains, Coinbase stock has recently experienced a dip, creating an ideal buying opportunity for investors. Crypto prices, and consequently Coinbase’s stock, are known for their volatility, but short-term price fluctuations shouldn’t deter long-term investors. In fact, these dips often represent the best opportunities to acquire high-quality assets at discounted prices.
The crypto landscape has evolved significantly since Coinbase reached its all-time high of $342 per share. While the journey ahead may involve volatility, Coinbase has shown the innovation and resilience necessary to capitalize on the ongoing growth of the cryptocurrency industry. As the adoption of digital assets continues to rise, Coinbase is well-positioned to benefit, making it a solid long-term investment and a stock to buy with urgency.
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