Investing.com – The Stock’s Dizzying Fall Coinbase Global Inc (NASDAQ:) rose sharply for the 4th straight session yesterday, and continued into the evening in after-market trading.
Coinbase lost 12.6% in the regular session, then deepening its losses of 15.67% in extended trading, after the publication of disappointing quarterly results.
In total, since the close of last Wednesday, the Coinbase action posted yesterday evening, at $61.55, a historic low, a fall of more than 52%. Since the end of March, the fall in the share price has also exceeded 70%.
As for the reasons for this powerful plunge in Coinbase stock, they are firstly linked to the fall of the , which lost 25% of its value between the peak near $40,000 last Thursday, and the .
In addition to the negative impact of the Bitcoin plunge, Coinbase stock also suffered last night from disappointing results for the first quarter of 2022. The company indeed reported the first loss per share in its stock market history, at – $1.98, while the consensus expected the balance.
Turnover was also clearly below the consensus, at 1.17 billion USD against 1.5 billion USD expected. This is a 27% drop in revenue over one year.
Separately, usage on Coinbase was down from the fourth quarter. Monthly retail transaction users (MTUs) fell to 9.2 million from 11.4 million in the fourth quarter, while total transaction volume fell from $547 billion in the fourth quarter to $309 billion.
But Coinbase doesn’t seem to be worried about its long-term prospects. The company has in effect reiterated an argument it has made before. She reminded shareholders that her stock should be viewed as a long-term investment due to the volatile nature of cryptocurrency price movements.
“We believe these market conditions are not permanent and we remain focused on the long term,” the company wrote in a letter to shareholders accompanying its earnings release. She also said she is focused on the next generation of cryptocurrency opportunities beyond just trading:
“As we continue to invest and improve our core investment platform, the era of crypto application is upon us, led by NFTs and decentralized finance, and we are increasingly focusing our efforts on these market opportunities.
Coinbase Stock: Should You Take Advantage of the Plunge to Buy?
Faced with the rapid and powerful fall of Coinbase stock in recent weeks, the question arises as to whether the current price now represents an attractive buying opportunity.
Incidentally, the first thing to understand about Coinbase, as the company recalled last night when highlighting the impact of cryptocurrency volatility on its business, is that buying its stock is a bet on the digital currencies through the exchange.
In other words, the fates of Bitcoin and Coinbase are intertwined. Buying Coinbase stock therefore requires having a positive view of the cryptocurrency market in general. However, with the support at $30,000 preventing a further decline in Bitcoin for the time being, the chances that the crypto market has bottomed out and is preparing to rise increase.
Additionally, the company’s development efforts in areas other than trading should help de-correlate its business from cryptocurrency volatility, in addition to greatly expanding its revenue base.
It also seems interesting to note that analysts are showing a strongly bullish opinion on Coinbase stock. Indeed, out of the 25 analysts who follow the action, an immense majority of 18 recommends the purchase. Moreover, the average target of these analysts, which stands at $255.67, reflects a phenomenal upside potential of +250%.
Finally, from a financial point of view, the valuation looks attractive. Indeed, the InvestingPro fair value of Coinbase stockwhich synthesizes several recognized financial models, stands at $171.37, i.e. a upside potential of almost 180% versus the price at the end of after-market trading Tuesday night.