Coinbase is not likely to fulfill the profit expectations baked into the stock’s current valuation due to rising competition in the cryptocurrency trading space.
The company has little-to-no-chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion.
Compass fails to generate any profits, and with minimal ability to cut costs, it’s hard to make a straight-faced argument that the firm can justify a ~$10 billion valuation.
This report aims to help investors sort through Coinbase’s financial filings to understand the fundamentals and valuation of this upcoming direct listing.
The new valuation changes nothing about the firm’s business but increases the execution risk of management achieving the expectations baked into the stock.
If Airbnb can continue to execute as it has to date, we think the firm could achieve the future cash flow expectations implied by a $28 billion valuation.