Coinbase stock is in a unique position within the growing market, one that makes the stock one you should buy today. The cryptocurrency market wasn't a thing until 2009, but already it's worth $2.6 trillion.
The cryptocurrency trading platform is looking to all aspects of the market, including an NFT marketplace, providing support services for major tech companies' crypto projects, and developing what it calls the "Coinbase Cloud."
Not to mention that Coinbase's financials are incredible, with annual net income of $6.4 billion and a price/earnings ratio of 11. If the company's earnings grow, then that value would be even better. That's great for Coinbase stock, especially since the company reinvests money earned to improve innovation and growth opportunities.
But today, let's focus on how all three of these recent announcements factor into making Coinbase stock a buy today...
Coinbase's NFT Marketplace
Coinbase Global Inc. (NASDAQ: COIN) generates revenue from trading volume. That means that any massive fluctuation in the price of cryptos doesn't affect Coinbase. So long as the platform's 68 million users continue buying and selling, the company has nothing to worry about.
In fact, Coinbase's trading volume for the second quarter hit an all-time high. The crypto platform saw a jump of 38% to $462 billion. Monthly transactions rose to 8.8 million, an increase of 44% over the previous quarter. And Coinbase reported that the total trading volume wasn't just Bitcoin. It expanded into Ethereum and a number of other cryptos.
This is why it's important that Coinbase continues to build out the platform to support altcoins and other digital currencies. As of November 2021, nearly 60% of the total crypto world is made up of altcoins.
Because of this need to continually diversify its platform, Coinbase is launching a marketplace specifically for NFTs. Just after the announcement of the launch, the crypto platform already has over 1 million users on the waitlist. Once it goes live, that number should only climb as NFTs continue to grow in popularity.
In turn, Coinbase's revenue should see a boost from those users trading on the NFT marketplace. And the company is already showing signs of strong performance, with a year-over-year increase in revenue of 1,097%.
While Coinbase's marketplace for NFTs will increase revenue from trading volume, the crypto platform's recent partnership will help provide a long-term external stream of revenue.
COIN's Involvement with Facebook's Crypto
Coinbase is partnering with Facebook to support its crypto project Novi, a digital-payment platform that runs on the crypto Pax Dollars.
Facebook's digital wallet Novi will allow users to make digital, cross-border transactions. Any funds deposited into Novi are converted into a stablecoin called Pax Dollar, a crypto that is linked to an external asset for value. Pax Dollars can then be sent to other parties and converted back into a local currency.
Novi will act as the storage container for users' Pax Dollars. The trouble is, Facebook needs to make sure they're safe, since cryptos can be stolen. Coinbase provides a solution to the security issue.
Facebook isn't the only company to turn to Coinbase for these support services, though it is the largest company to do so.
It's this space of support services where Coinbase has seen growth. The crypto platforms fees from this area of cryptos were $31.7 million - an increase of 35% over the previous quarter.
While this is a minor segment of Coinbase's business, it provides another steady stream of revenue, one that isn't reliant on trading volume. And with the tech giant's move into a "metaverse" company, cryptos are likely to be more widely used as currencies in gaming and e-commerce within the online world.
This should drive more traffic into the crypto sphere and raise demand for what Coinbase is doing. the company has the opportunity to continue to grow its support services over the next few years.
But there's one more major project that Coinbase is working on that presents the greatest long-term growth potential...
The Long-Term Upside of Coinbase Cloud
Coinbase Cloud aims to be the crypto equivalent of Amazon's cloud computing business, Amazon Web Services (AWS).
Basically, this allows e-commerce businesses that want to allow payments via crypto to do so. Coinbase Cloud can facilitate the transaction and provide a digital wallet to store the payments. It would also be a crypto trading platform that wants to compete directly with Coinbase to exist since Coinbase Cloud provides everything a competitor might need to build its own service. Considering how complex it is to support the different cryptos, it's easier to outsource from Coinbase rather than build one from scratch.
This might sound counterintuitive to provide the competition with tools to build a product that could rival your own, but it gives Coinbase a unique edge. By offering crypto services through Coinbase Cloud, the company is providing itself with a long-term upside. And the more financial companies that offer cryptos, the better positioned Coinbase's long-term upside is.
If Coinbase is able to power other cryptos, this removes some of the uncertainty that comes with relying on that trading volume and brings some stability to the company's revenue. It's yet another way that Coinbase's revenue will become that much more sustainable over time.
All of this is to say...
Coinbase Stock Price Prediction: 76% Gain in Just One Year
Overall, we're bullish when it comes to Coinbase.
The company's blend of current and future revenue streams gives the crypto trading platform a unique upside potential as the crypto market continues to evolve and mature. And the company is in the green across the board, with a profit margin 53%. To add some perspective, the national average across different industries is only 7.7%.
The shear amount of cash that Coinbase is generating insulates it a bit from some of the risk that comes from trading cryptos and NFTs. It has plenty of capital to pursue innovative projects through Coinbase Ventures that can provide additional streams of revenue, and the company is going to be a major player as the "metaverse" grows.
Coinbase is trading around $334 per share, down more than 2% from Thursday. But this isn't a bad thing.
In fact, it's a great thing. This just means that you've the chance to buy Coinbase at a cheaper price. Because at the end of the day, Coinbase is going to perform strongly over the coming years as the business continues to mature alongside the crypto industry.
CNN analysts expect Coinbase to climb as high $600 over the next 12 months - a 76% increase over today's price. And we believe this trading platform could reach that, and then some.
This Crypto Market Will Mint a New Class of Millionaires
A little-known corner of the crypto market could be THE most lucrative one on the planet right now - and it's projected to get a $14.2 trillion infusion in the next four years.
But with over 8,000 of these tiny cryptos available, most of which won't shoot up in price, knowing how to pick "winners" can feel like a guessing game.
That's why trading expert Tom Gentile developed a tool that can detect hidden price patterns in these cryptos and identify the ones with the highest probability of skyrocketing.
Virtually anyone can tap into this simple way to make money on crypto - watch this and see how easy it can be.