Coinbase Can Easily Win, As Crypto Is Still in Its Early Stages

Stocks to buy

Besides the investors who made early moves, no person or company has benefited as much from the crypto boom as Coinbase Global (NASDAQ:COIN). The company attracted users, financials soared and it expanded its market share. Coinbase was in the right place at the right time and it has made the most of it. As a result, COIN stock looks attractive with its massive growth potential.

COIN stock Coinbase logo on screen with Bitcoin coins

Source: 24K-Production / Shutterstock.com

The stock has gone down from $342 to about $200 in the past year, but it has a solid chance of hitting the $300s again. Several catalysts are working in favor of COIN stock, and this dip is a good chance to buy. With that in mind, let’s see what is working for the company.

Crypto Industry Is in Its Early Stages

The crypto industry has gained massive popularity over the past five years, but there was a time when investors only knew about Bitcoin (BTC-USD). As years passed by, new crypto assets came to the limelight and everyone rushed to make the most of the crypto boom.

The industry is still in its early stages, and this means there is ample growth potential. Bitcoin has soared more than 4,200% and hundreds of other crypto assets are going up even more.

What this means for Coinbase is huge growth potential. The platform has a first-mover advantage and a long way to go. Many people are still not aware of cryptocurrency as an investment, and even if they are, many haven’t made their first buy yet.

This means there is a huge possibility of attracting new users over the next five years. The company already has 89 million verified users, but this is not enough.

As Coinbase continues to add new assets to the platform and if it offers low fees, consumers are going to stick to the platform. There is rising competition in the industry, but Coinbase has already established itself as a solid player. If it continues to add new assets while offering strong security, consumers will stick with it.

Solid Numbers

Coinbase has reported impressive fourth-quarter results with a revenue of $2.5 billion, up from $585 million in the same quarter previous year. Whenever users make a transaction, the company takes a cut. This means it is less affected by market volatility and more dependent on transaction volume.

The company reported $2.2 billion in transaction fees in the fourth quarter. Hence, the movement of Bitcoin or Ethereum (ETH-USD) alone will not affect its fundamentals.

The majority of its revenue comes from transaction fees. However, Coinbase will have to work around eliminating these fees or maybe decreasing them to compete with players in the industry who offer free trading.

Coinbase is currently testing a subscription service that will provide free trading and customer support for a flat monthly fee. If this works out in time, it will benefit the bottom line. I am certain its management is working to diversify its revenue, and we might see some upgrades very soon.

The Bottom Line on COIN Stock

Coinbase is leaving no stone unturned to attract users. It is offering unique features and products to ensure novice investors do not feel intimidated.

The company has introduced Coinbase Pay, which will help streamline the process of adding funds to the wallet. It will make transactions easier and quicker. Users can link their bank account or debit cards with their Coinbase profile and move funds easily.

Besides the strong fundamentals, Coinbase is constantly working on bringing the latest investment tools and features to users. COIN stock will benefit from its efforts to recruit new users, Coinbase Pay and the overall growth of the crypto industry. As the government mulls over new crypto regulations, COIN stock has a lot to look forward to.

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

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