🫠Coinbase
I am not one to change long-term conviction over short-term news. I didn’t expect their insane rate of growth to continue, if management did, they were clearly delusional and not realizing why some/many people had gotten into crypto to begin with (plenty were just bored af during Covid). And knowing how investors and markets work, people being weak souls they are, panic sell anytime there are rough sees and trading volume slows. These situations are when I’ve increased my net worth the most. I still feel crypto assets and blockchain will continue to gain adoption and Coinbase is the only public company in the space. We’ll see if they adapt or stay delusional, I’ll keep my chips with management for now. Their high fees, although I hate them and it limits my use of their platform (don’t use it for trading, just buy/hold/staking) gives them plenty of room to lower that as mainstream use rises. Pricing them like they’re filing for bankruptcy is as irrational as anything I’ve ever seen. At ~$55 today I’ll continue eating it up to lower my entry point. I didn’t think it was risky at $100, I sure as hell don’t think it’s risky at $55. My margin of safety continues to get larger. People will be paying me to take their shares next week🤣these are the irrational price swings I LOVE to take advantage of. Serving em up on a platter. It was clearly over valued for a long time, but a $60 stock, it is not.
Steve Matt's avatar
Management guidance for full year 2022 was basically them yelling warnings to investors that there could be significant shrinkage (not a deceleration of growth but literal shrinkage) yet investors largely ignored it. Management guided monthly transacting users for 2022 for a HUGE range of 5MM to 15MM. For context, 2021 was 11.4MM, so management said that metric could decrease by up to 56%. Average transacting revenue per user (ATRPU) was guided for "pre-2021 levels" (2021 was $64, 2020 was $45, 2019 was $34). Another metric where management was hollering that 2022 could be rough.

What happened in Q1? MTUs was just 9.2MM and ATRPU dropped all the way down to $35 per user. Exactly what management warned about happened.

And now management is warning for more pain in Q2. They already provided April MTUs (8.9MM so another slowdown) and total trading volume ($74B when Q1 was $309B so $103B/month in Q1) in their Q1 shareholder letter. And the Q2 outlook is "We believe MTUs will be lower in Q2 compared to Q1" and "We believe total Trading Volume will be lower in Q2 compared to Q1".

i actually trust management. I just think if they can't get a grasp on what the crypto market will be doing, I have no chance.

They remain on my Buy Watchlist but it used to be like 80% interest in buying and 20% curiosity. Now it's like 90% morbid curiosity and 10% possible buy interest
Eric Messenger's avatar
@interrobangbros I definitely expect roughness. Probably the longest term play in my portfolio. I definitely understand. And I am going to find out in 2 years whether I am suffering from a psychological fallacy of my own doing.
Steve Matt's avatar
@wall_street_deebo I think it's pretty close to inarguable that the crypto industry will go through another massive bull run in the next couple years. The question is will Coinbase be able to capitalize again? Will regulations have made it tougher for them to capitalize?
Rihard Jarc's avatar
Agree with you that the velocity of the price moves in these last few days on this name was really irrational behaviour.

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