Coinbase: On the Way to the First Billion-Dollar Cryptocurrency Stock?

Coinbase's success story began in June 2012 with the vision of facilitating the buying and selling of Bitcoin. Since then, the digital asset brokerage and exchange platform has evolved into a comprehensive company offering a wide range of services. After a disappointing year in 2022, the company’s shares have seen a remarkable increase of 697% over the past two years. As of this reporting on December 19, the company has a market capitalization of 70 billion dollars. The exciting question is: Can Coinbase continue its upward trend and increase its value fourteen-fold to become the first trillion-dollar cryptocurrency stock by 2040? With a pioneering advantage, strong network effects, and an expanding financial ecosystem, Bitcoin deservedly attracts significant interest from investors. However, smaller blockchain projects like Ethereum, XRP, and Solana also present potential investment opportunities for those who wish to invest in this industry. Here, Coinbase offers a unique opportunity. The company essentially represents a bet on the growth of the entire cryptocurrency market, as it is connected to the industry in various ways. Many are familiar with the trading and exchange sector, which allows individuals and institutions to buy and sell hundreds of different cryptocurrencies. This activity accounted for 51% of net revenue in the third quarter, which ended on September 30, compared to a significantly higher share of 88% in the same period three years ago. In recent years, the management team has increasingly focused on diversifying the business model and relying less on volatile trading volume, instead emphasizing more predictable subscriptions and services. This segment includes, among other things, revenues from stablecoins, staking rewards, and custody solutions. The hope is that as cryptocurrencies continue to develop from being solely speculative instruments to being used in everyday life, Coinbase will become less dependent on volatile trading revenues. Coinbase also makes direct investments in new companies or technologies in the crypto space. As of September 30, these strategic investments were valued at 359 million dollars. While emerging crypto start-ups might be seen as threats to Coinbase's competitive position, investing in many of these companies presents financial potential in the event of their success. Coinbase's rise over the past decade is admirable. However, the company's ultimate success depends not only on the long-term flourishing of the cryptocurrency industry but also on Coinbase's ability to seize this opportunity.