The largest U.S. cryptocurrency exchange, Coinbase (NASDAQ:COIN) stock has become a familiar name today. Majority new investors in Bitcoin (CCC:BTC-USD) use Coinbase. The company went public via a direct listing in April.
COIN stock was as high as $342 in April and is currently exchanging hands close to $225. This is a good entry point for investors. I am bullish on COIN stock and believe it will go higher in the coming months.
With that in mind, let’s take a look at the two catalysts driving the growth of COIN stock.
High Growth Prospects
A huge reason to consider COIN stock is the massive growth prospects. The world has recognized the way cryptocurrencies work and there is growing interest from every segment. One cannot deny the fact that cryptocurrencies are here to stay and they are going to make big news in the near future. Coinbase will play a very important role in allowing investors to capitalize on the growth of the industry.
Coinbase caters to retail and institutional clients which means it has a massive market to cater to.
The Q1 earnings of the company showed its strength. It generated a revenue of $1.6 billion, which is up 792% from a year ago. Further, the company had 56 million verified users at the end of the quarter and this shows that users are relying on Coinbase to make the investment in cryptocurrencies. This is just an overview of how fast the company is growing and its potential to add new users in the coming years.
The trading volume of the company was $335 billion and monthly transacting users of 6.1 million.
As crypto gains popularity, Coinbase will see a rise in revenue and users. This will take COIN stock higher. Coinbase is consistently working towards growing its offering and if it manages to widen the available investment options, it will be able to attract users to the platform.
Attractive Updates For Users
The company is the first authorized company to provide crypto custody in Germany and it is proof that Coinbase will be able to meet the requirements of German regulators. This might allow Coinbase to expand to different countries and receive similar approvals in the future.
Coinbase recently signed an agreement with Alphabet’s Google (NASDAQ:GOOG, NASDAQ:GOOGL) and with Apple (NASDAQ:AAPL) for payment services. As per the agreement, customers in the U.S. can use their Coinbase debit card with Apple Pay and Google Pay to spend cryptocurrency holdings on the go. It also allows users to earn crypto rewards.
This partnership will work in favor of the company as it will see a rise in users who are looking to conveniently buy and sell cryptocurrency. Coinbase will automatically convert the cryptocurrencies to U,S, dollars and will send the funds to the user’s card for purchases or withdrawals.
The Bottom Line on COIN Stock
Coinbase hasn’t gone very high since its debut which is an opportunity for you to cash in on the growth. I am bullish on the long-term prospects of cryptocurrency and I believe Coinbase is a trusted name when it comes to investing in cryptos.
If the prices of cryptos soar, the stock could go higher soon.
COIN stock has shown volatility in line with the fluctuations in Bitcoin. However, the company is not solely dependent on the performance of cryptocurrencies. It generates revenues from the transaction fees. Hence, any volatility in crypto is good for the company as it will lead to higher trading volumes and higher revenue.
The rally in cryptocurrency prices in the first quarter attracted many investors to the platform. Many invested in cryptocurrencies for the first time and Coinbase made the most of it.
The Q2 results will take the stock higher. All in all, COIN stock is a buy.
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.
