Coinbase Global’s stock rises 2%, even as crypto platform gets hit with bearish Raymond James report- Market Watch
Is it important for crypto for Coinbase’s stock price and general profitability to be successful? (Not just Coinbase, but Kracken and others are looking to go public, as well.) While Coinbase is becoming one of the better know crypto names in the mainstream because of its move to become a public company, the question is, "Does it help crypto in the long run?"
Many hardcore crypto traders resent the move of companies to go public and see it as a sellout. I don’t know if I agree or disagree with this. It could be argued either way, maybe in another post or just check Reddit.
We saw a jump in the stock prices of public mining companies in the beginning of 2021 that seemed to mirror the crypto growth. So, in an essence, if these companies simply mirror crypto prices we would want their stock to rise, but, then if that is all they did, we could just buy crypto and get the same results. On the flip side, if you are looking for long term gains, Coinbase would be a hard sell. They will face increased competition from Kracken, Robinhood and others. So, conventional wisdom would say simply invest in crypto, instead of companies making their money as exchanges.
“Coinbase is currently enjoying substantial momentum,” wrote the Raymond James team, adding in the report that “the vast majority of its revenues currently come from trading commissions and over and over again history has shown that brokerage and exchanges see excess profits competed away unless there is a structural barrier to entry.”
Results from Coinbase, released last month, showed that the U.S.’s largest crypto brokerage earned $771 million, or $3.05 a share, in the first three months of 2021, up from $32 million a year earlier. And total revenue surged to $1.8 billion from $191 million in the prior period. -Market Watch
My initial reaction is that Coinbase performing well is a good sign for the cryptoverse. Coinbase has helped make many people uncertain about buying crypto more comfortable, especially since going public. The true crypto players may never touch it, but, that is just fine. There is room for all.