What happened
Shares of leading cryptocurrency trading company Coinbase Global ( COIN -8.47% ) were down 5.4% today as of 1:30 p.m. ET. Cryptocurrencies in general fell in value over the last 24-hour period, dragging Coinbase along. Bitcoin ( BTC -3.04% ) fell 3.2%, and Ethereum ( ETH -3.50% ) was down 4.2% in broad weakness across the crypto-verse. Investor angst has been building this week as Russia’s attack on Ukraine intensifies.
Image source: Getty Images.
So what
In related news, some officials in Ukraine are calling on Coinbase and other crypto exchanges to ban all transactions for Russians. The company is following international sanctions against Russia, but says it will not levy a blanket ban on crypto trading for all Russian citizens.
Coinbase also released fourth-quarter 2021 earnings at the end of February that demonstrated its ability to withstand wild fluctuations in crypto prices and continue growing. Net revenue was double what it was in the third quarter, and 401% higher than in the fourth quarter of 2020 as trading volume exploded higher.
Now what
Besides the Russia-Ukraine war, Coinbase has also been struggling along with other high growth stocks in light of the Federal Reserve’s expected first interest-rate hike during the pandemic era later this month. The Fed has pledged to try to fight inflation, so several rate hikes are likely in order as 2022 progresses. Higher interest rates lower the present value of risk assets like stocks.
Nevertheless, interest in trading and investing in crypto using Coinbase’s platform is skyrocketing, and actual uses beyond speculation are also on the rise. These include non-fungible tokens (NFTs), decentralized finance (DeFi) applications, and subscription revenue that allows for staking and passive income from crypto holdings.
Coinbase trades for about 11 times 2021 net income, so the market is still discounting the crypto exchange on worry that interest in trading crypto could be cyclical and eventually suffer a downturn.
But crypto is gaining steady adoption among consumers around the globe, increasing the possibility that it and the blockchain technology it’s based on are here to stay. If you’re looking for a company to invest in for the long term on this movement, Coinbase deserves to be top of mind.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.