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Coinbase Stock Price in 5 Years: Will COIN Shares Continue Recovery Play?

Last Updated December 22, 2023 2:40 PM
Teuta Franjkovic
Last Updated December 22, 2023 2:40 PM
Key Takeaways
  • Coinbase’s stock price reached new highs, driven by the overall bullish crypto market and Binance’s legal issues.
  • ARK Invest’s stock sales highlight the firm’s ability to capitalize on market trends and generate revenue.
  • ARK Invest capitalizes on Coinbase’s stock surge by selling a portion of its holdings.

Despite facing its seventh consecutive quarterly loss, Coinbase Global (COIN) , the largest crypto exchange in the U.S., displayed resilience as its third-quarter loss of $2 million exceeded Wall Street expectations.

This marks the company’s closest approach to positive earnings since the crypto boom in the fourth quarter of 2021. The news initially led to a 5% dip in the company’s stock, but it rebounded in November, reaching over $94.

However, Coinbase remains embroiled in a legal battle with the U.S. Securities and Exchange Commission (SEC), which is accused of operating an unlicensed crypto securities exchange, broker, and clearing agency. This ongoing legal challenge poses potential risks to its future earnings.

ARK Invest Continues to Sell COIN Shares as Stock Reaches New Highs

ARK Invest, a prominent investment firm seeking to launch a spot Bitcoin exchange-traded fund (ETF) next year, has continued to monetize its significant holdings of Coinbase (COIN) stock.

Cathie Wood’s investment company recently adjusted its investment portfolio by divesting shares in Coinbase. Specifically, within its Innovation ETF, Ark Invest sold 68,769 Coinbase shares, totaling a substantial $11.6 million. Furthermore, in its Next Generation Internet ETF, Ark Invest offloaded 11,349 shares, valued at $1.9 million. This strategic move reflects Ark Invest’s dynamic approach to managing its holdings in response to market conditions and investment priorities.

This recent sale marks another substantial divestment of Coinbase shares by Ark Invest in December. In the initial and subsequent weeks of the month, the investment management firm previously divested shares totaling $108 million and $59 million, respectively.

With the additional $30 million worth of Coinbase shares sold this week, Ark Invest’s total stock sales for December have now reached an approximate sum of $210.5 million. This ongoing adjustment to its portfolio underlines Ark Invest’s proactive approach to optimizing its holdings in response to market dynamics and strategic considerations.

Coinbase’s stock has soared 280% year-to-date (YTD), reaching new yearly highs  in tandem with the bullish crypto market, as per TradingView data. The stock’s rally has also been fueled by the guilty pleas in November by rival exchange Binance and its former CEO Changpeng Zhao on money laundering and sanctions violations in the United States.

On December 22, Coinbase’s stock hit a new record high above $170,19, a level not seen for more than a year and a half. TradingView data indicates that the stock has also gained nearly 62% over the past 30 days.

Coinbase stock performance year-to-date
Coinbase stock performance year-to-date

Speculating On SEC’s Decision

However, this doesn’t mean Coinbase is done for. The company, under the leadership of CEO Brian Armstrong, is opting to defend itself in court, expressing vocal disagreements with the SEC.

Scheduled for January 17, 2024, oral arguments in a Manhattan courtroom will shed light on this legal battle. Simultaneously, Coinbase actively engages in lobbying efforts in Washington, advocating for increased regulatory clarity in the crypto space.

While legislative processes can be slow and unpredictable , the company remains optimistic about the U.S. regulatory landscape, stating: “While legislating can be slow and unpredictable, we are still optimistic the US will get this right.”

Despite grappling with legal and regulatory challenges, Coinbase’s stock has surged by an impressive 128% since the beginning of the year.

The company has benefited from a year-long rally in bitcoin and other digital assets, driven by speculation regarding potential SEC approval for spot bitcoin ETFs. This anticipation allows investors to gain exposure to cryptocurrency without direct ownership.

CBOE, BlackRock, And Valkyre Name Coinbase As Surveillance Partner

The world’s largest asset manager, BlackRock, has re-filed its application for a spot Bitcoin ETF, revealing a ‘surveillance-sharing agreement’ with Coinbase. Additionally, the price surge coincided with news that Cboe Global Markets, representing financial giants BlackRock and Fidelity, resubmitted its spot Bitcoin ETF application.

Notably, Cboe’s initial proposal, which was vague and challenging to comprehend, was previously rejected by the U.S. Securities and Exchange Commission (SEC). Now, their renewed application aims for a clearer understanding.

Valkyrie Investments has also resubmitted its spot-Bitcoin exchange-traded fund application, designating Coinbase as its surveillance-sharing partner. This move follows the SEC’s feedback, prompting revisions and resubmissions of recent applications.

Coinbase Vs. SEC In Short

The U.S. Securities and Exchange Commission filed a lawsuit against Coinbase on June 6. The federal authority then claimed that Coinbase used its crypto asset trading platform as an unlicensed national securities exchange and broker.

The SEC also claimed that at least 13 crypto assets, including the tokens for Solana and Cardano, that Coinbase made available to consumers fall under the definition of “crypto-asset securities,” as stated in the complaint.

The regulator claims that Coinbase’s staking program is both an investment contract and an unregistered securities since it allows cryptocurrency investors to “earn financial returns through Coinbase’s managerial efforts.”

Brian Armstrong, co-founder and CEO of Coinbase, stated in a tweet  after the SEC’s statement that, in part, “Regarding the SEC complaint against us today, we’re proud to represent the industry in court to get some clarity around crypto rules finally.”

The lawsuit is still ongoing as the commission examines the latest ETF application involving Coinbase.

Since then, Coinbase has submitted a request to dismiss the SEC’s complaint, claiming that the agency lacks jurisdiction and that its transactions do not meet the definition of securities.

Is Coinbase Profitable?

Analyzing a company’s profitability is a crucial element of an investor’s research, as sustained profitability often plays a pivotal role in driving long-term stock performance. Examining Coinbase’s financial health reveals noteworthy insights.

As of mid-2023, Coinbase had not achieved profitability, reporting  a net loss of $97 million on $663 million in net revenue for the second quarter. Despite ongoing losses, the company has made substantial progress in narrowing its deficits over the past year.

Coinbase financial results
Coinbase financial results

The company has significantly curtailed losses through enhanced financial discipline. It significantly cut technology and development expenses, as well as general and administrative costs, through a notable reduction in headcount. Transaction expenses dropped  from 21% to 16% of revenue, and sales and marketing spending decreased from 18% to 13%.

To sustain progress, Coinbase must maintain stringent expense management and reignite revenue growth. Achieving these objectives is crucial for the company to transition into profitability, potentially boosting its stock price over the long term.

COIN In The Next 5 Years

Coinbase became the first cryptocurrency platform to go public and offer its shares on a stock exchange in the spring of 2021, and the price of COIN stock has been steadily declining since then.

The stock price fell more than six times after hitting its all-time high at about $430. According to some analysts , purchasing Coinbase (COIN) stock when it is at its lowest price could be a wise long-term investment.

The company stock enjoyed a strong run as the crypto markets stabilized in 2023. Compared to crypto markets, which have increased by about 52% over the same period, COIN has increased by 140% from the year’s beginning.

At the time of writing, the price  was up by 2.2% in pre-market at $94.12.

What Will COIN Price Be In 2023?

The current mean price target for COIN is $58.65, suggesting a significant 45% downside from the July 13 trading session’s price. This would represent a notable trend reversal, considering Coinbase’s year-to-date rise of 218%, primarily fueled by increased cryptocurrency trading volumes.

 

 

COIN prediction
Credit: TradersUnion

COIN shares surged recently, propelled by positive factors such as the SEC’s approval of a new Bitcoin ETF supported by BlackRock. Coinbase is expected to play a crucial role as the custodian and prime broker for this ETF. This resulted in an impressive nearly 24% increase in Coinbase shares in a single trading session post-announcement.

What Will COIN Price Be In the Next Five Years?

The stock price is closely tied to the cryptocurrency sector’s growth, influenced by factors like active users, long-term investors with cryptocurrencies, and trading volume. The recent outflow of client funds from Coinbase and other exchanges, triggered by the FTX collapse, impacted the stock price. As long as the Bitcoin market cap remains low, Coinbase’s price is expected to decline.

According to the analysts , the long-term price forecast for Coinbase (COIN) could reach $257.73 by 2025. It will then move to $1316.77 by 2030 and to $2264.9 by 2034.

COIN prediction
Credit: TradersUnion

Important Variables Affecting Coinbase’s (COIN) Stock Price

  • Financial metrics, such as sales, net income, EBITDA, and other metrics and multipliers, show how competitive the market is.
  • Crypto market situation. Cryptocurrencies are quickly becoming recognized as valuable investments. Market expansion and the rise in Coinbase’s price hinge on regulators recognizing them as full-fledged financial instruments alongside fiat money and securities.
  • Security of the platform. Official claims show that 98% of user funds in USD are kept in cold wallets.
  • Confirmation of reserves and liquidity. Increased user confidence and evidence of liquidity on the exchange have a beneficial effect on stock price.

The stablecoin USDC is available on Coinbase. The success of its use in exchange for fiat money in financial transactions may indirectly affect the stock price.

Beyond Coinbase’s Impact

While Coinbase currently dominates headlines  with its recent price fluctuations, the potential regulatory ruling could extend its effects beyond this specific company.

The anticipated SEC judgment is likely to influence  various cryptocurrency exchanges and the broader crypto market. It will showcase the regulatory body’s overarching authority in this evolving industry.

In summary, anticipation of the forthcoming SEC decision is influencing the cryptocurrency market, evident in the increased value of Coinbase. The crypto landscape and exchanges face potential significant shifts, underscoring the substantial impact of regulatory changes at this crucial juncture.