Coinbase stock price in five years: Can COIN shares survive crypto tumult?
Coinbase’s share price has fallen since the cryptocurrency exchange was fined $50m for not carrying out proper compliance checks.
Coinbase (COIN) was hit with the penalty by the New York Department of Financial Services (NYDFS) on 4 January, after the regulator found that Coinbase had treated its onboarding requirements for customers as a “simple check-the-box” and had not carried out proper background checks.
NYDFS superintendent Adrienne Harris said: “Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth. That failure exposed the Coinbase platform to potential criminal activity.”
Coinbase acknowledged the fine and, in a blog post, said that the investigation was based on the company’s compliance programme in around 2018 and 2019, as well as the compliance backlogs that built up as the exchange expanded in 2021, saying: “We took NYDFS’s concerns seriously and have taken substantial measures to address these historical shortcomings.”
The news caused the price of COIN to fall overnight, from $37.70 at the close of trading on 4 January to $34.71 when markets opened the following day. The price of the stock has continued to fall and, as of 6 January 2023, it was worth about $32.80.
The fall in price comes as the exchange faces the ongoing fallout from the collapse of the FTX crypto exchange.
Coinbase (COIN) Live Stock Price Chart
What is the outlook for the Coinbase share price over the long term? Is now the time to add COIN to your portfolio on the dip?
In this article, will we look at the prospects for Coinbase’s stock over the next five years.
Coinbase stock offers crypto proxy
US-based Coinbase is the world’s second-largest cryptocurrency exchange by trading volume after Cayman Islands-registered Binance, based on data from CoinMarketCap.
Coinbase was founded in 2012 by its chief executive officer (CEO) Brian Armstrong, a former engineer at Airbnb (ABNB), and Fred Ehrsam, a former trader at Goldman Sachs (GS). Ehrsam left the company in 2017 to pursue other opportunities in the cryptocurrency space, but remains on the Coinbase board of directors.
Coinbase stock provides a way for retail and institutional investors to take a position on the cryptocurrency markets in their stock portfolios without having to buy and sell coins and tokens on exchanges or hold them in separate wallets.
Coinbase went public on the NASDAQ Stock Exchange via a direct listing in April 2021 during a strong cryptocurrency market rally. The bitcoin price (BTC/USD) reached a new high at the time above $63,000 in anticipation of the listing.
COIN stock launched with a reference price of $250 per share and closed its first trading session at $328.28 per share. The stock has since been highly correlated with the direction of the bitcoin price, falling to around $224 per share during the May 2021 sell-off and rebounding to $342.98 in November 2021 when bitcoin reached its all-time high above $68,000.
Both bitcoin and the COIN stock price have been in an extended downward trend in the past year.
COIN stock price faces strong crypto headwinds
The COIN share price started 2022 at $251.05 per share and declined to $153.19 on 14 March, as the US dollar strengthened and cryptocurrencies sold off in a flight to safe-haven assets in the wake of Russia’s invasion of Ukraine.
The stock ticked up above $204 toward the end of March, but then resumed its decline and dropped to $53.72 per share on 11 May, as the terra (LUNA) cryptocurrency ecosystem collapsed and the dollar climbed to a 20-year high against a basket of currencies.
COIN rebounded to $98 per share in August, as the financial markets anticipated a slowdown in the pace of US interest rate hikes, which have continued to drive the dollar higher. But the markets subsequently pulled back and the dollar strengthened as inflation data continued to show consumer prices at their highest levels in decades.
That indicated the US Federal Reserve (Fed) would hike interest rates further, supporting the strong dollar and weighing on asset classes including stocks and cryptocurrencies.
The COIN stock price declined to $62.78 on 6 September, moved up to $82.55 on 12 September, and then turned lower, falling below $62 later in the month. COIN traded between $63 and $75 in October, before dropping to a fresh low of $45.98 on 9 November in response to turmoil at the FTX exchange, which subsequently filed for bankruptcy protection on 11 November 2022.
In a blog post on 8 November, Coinbase Chief Financial Officer (CFO) Alesia Haas stated:
Haas added: “There can’t be a ‘run on the bank’ at Coinbase. As you can review in our publicly filed, audited financial statements, we hold customer assets 1:1… we believe that what’s happening now is yet another example of why strong, clear regulatory standards are so important. Fragmented, opaque regulatory frameworks in the US are driving crypto to offshore unregulated exchanges, where looser regulations can put customers at risk.”
Coinbase financial performance
At the end of the third quarter of 2022, Coinbase held $5.6bn in total available USD resources, including $5bn in cash and cash equivalents.
“What happened at FTX is not possible to happen at Coinbase, and we are a regulated institution,” Armstong told CNBC on 10 November.
Coinbase’s third-quarter results on 3 November showed that the company’s revenue dropped by 53.4% from the third quarter of 2021 to $576m, and it recorded a net loss of $545m, compared with a net income of $406m in the third quarter of 2021. But subscription and services revenue increased by 45.5% year-on-year to $211m from $145m.
The company’s monthly transacting users (MTUs) rose by 16.4% year-on-year, to 8.5 million from 7.3 million a year earlier, although that was down from 11.2 million in the fourth quarter of 2021.
Coinbase reduced its operating expenses by 22% during the quarter, including through the implementation of job cuts, and said it will continue to closely manage its expenses given the current macroeconomic conditions.
Coinbase is expanding its partnerships to increase the adoption of cryptocurrencies among institutional investors and for online payments.
In August 2022, Coinbase announced an agreement with BlackRock (BLK), the world’s largest asset management company, to provide institutional clients of BlackRock’s Aladdin investment management platform with direct access to cryptocurrencies through Coinbase Prime, starting with bitcoin.
In October 2022, the company formed a partnership with Google (GOOG) to allow Google Cloud customers to pay for the services with cryptocurrencies supported by Coinbase Commerce. Under the agreement, Coinbase is transferring its data applications from the Amazon Web Services (AWS) platform to Google Cloud.
The company is moving to a product structure with four groups: consumers, institutions, developers, and platforms. The new platform group “is there to build the shared components across the different product groups that all of our products use, for instance, connecting into the different blockchains out there, generating transactions, storing crypto, things like that,” Armstrong said on the earnings conference call.
“I think there’s actually opportunities to thrive in this environment,” Armstrong said.
What is the outlook for the COIN share price over the long term?
Coinbase stock in five years: Analysts’ views
What do analysts think of the Coinbase stock projections for the next five years? What could a Coinbase stock forecast in five years’ time look like?
Armstrong expects there will be a clearer regulatory environment for cryptocurrencies around the world in five years, which will “unlock a lot more institutional capital”.
Armstrong noted that blockchain scalability, the ability to maintain performance as traffic increases, will continue to improve, with new layer-2 solutions that will enable new use cases. More countries could adopt cryptocurrency as legal tender, as El Salvador has with bitcoin, and many are likely to pursue central bank digital currencies (CBDCs).
What does that mean for the COIN share price?
The median price forecast from 23 analysts who have issued a 12-month Coinbase stock forecast as on 6 January was $82.30, according to data compiled by MarketBeat, with estimates ranging from a low of $30 to a high of $275. There were 10 ‘buy’ ratings, 10 ‘hold’ and four ‘sell’ recommendations.
On 5 January, market analysts Cowen downgraded their assessment of COIN from ‘outperform’ to ‘market perform’.
The Coinbase long-term stock forecast from algorithm-based platform Wallet Investor raised questions about the company’s long-term viability, predicting that the share price could drop to $0.000001 by January 2024.
Prediction service PandaForecast was more optimistic about the outlook for the COIN five-year forecast, projecting it could close 2027 at between $7.07 and $8.29 per share.
Other platforms refrained from issuing Coinbase stock five-year forecasts due to high crypto market volatility.
The bottom line
If you are looking for a COIN forecast to inform your trading approach, it’s important to remember that, given the volatility of the cryptocurrency markets, it is difficult for analysts and algorithm-based forecasters to come up with accurate long-term predictions.
We recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis, and expert opinions before making any investment decision. Keep in mind that past performance is no guarantee of future returns, and never invest money you cannot afford to lose.
FAQs
Where will COIN stock be in five years?
It is difficult to say for sure where COIN stock will be price-wise in five years’ time due to the volatility of cryptocurrency markets. Prediction service PandaForecast was downbeat about the future COIN price as of 6 January 2023, projecting it could head into 2028 at $7.07 and $8.29 per share. Algorithm-based website Wallet Investor saw the stock sharply declining in value by the end of 2023.
Bear in mind that analysts’ Coinbase stock forecasts can be wrong and have been inaccurate in the past. Always conduct your own research before investing or trading.
Will Coinbase stock go up or down?
As with the longer-term stock price projection for COIN, it is difficult to forecast the stock’s price due to broader crypto market volatility.
Remember to always do your own research before trading or investing. Never invest more than you can afford to lose.
Is Coinbase a good long-term investment?
Whether you think it is a good time to buy Coinbase stock depends on your personal circumstances, such as risk tolerance and investing goals.
Remember that past performance does not guarantee future returns, and never invest more than you can afford to lose.
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