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On a long-term basis, Coinbase stock remains bullish supported by an upward call for the cryptocurrency industry by several Wall Street analysts.
Coinbase Global Inc (NASDAQ: COIN) stock closed Monday trading at $248.24, down 3.92% from the day’s opening price. Additionally, COIN stock dropped approximately 1.16% further during Tuesday’s pre-market to trade around $245.37. The COIN stocks’ sustained losses in the past few two days have been attributed to an announcement that the company is planning to sell $1.25 billion worth of convertible debt.
Essentially, COIN shareholders had anticipated a market reversal that had taken shape in the past two weeks but has since been invalidated. After the breakout to the downtown side on the shorter timeframe, Coinbase stock may continue to bleed further in the coming weeks.
Coinbase Stock and Market Outlook
However, on a long-term basis, Coinbase stock remains bullish supported by an upward call for the cryptocurrency industry by several Wall Street analysts. Notably, the company is building a stronger balance sheet that could help its stock market in case of a sudden bear market. Moreover, the cryptocurrency industry is volatile and unpredictable. According to the company, the $1.25 billion raised from the convertible debt will be used to diversify and help the company grow in prospects.
“This capital raise represents an opportunity to bolster Coinbase’s already strong balance sheet with low-cost capital that maintains operating freedom and minimizes dilution for Coinbase’s stockholders,” the company said in a statement.
Primarily, Coinbase collects its revenue from digital assets’ trading including Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. However, the competition in the cryptocurrency exchange industry has prompted Coinbase to seek alternative services that could bring in more revenue in the future.
Thanks to the ongoing long-term cryptocurrency bull market, Coinbase recorded a notable improvement in revenue collected during the first three months in comparison to prior years. According to its earnings report last week, Coinbase reported revenue of $1.8 billion in revenue during the first quarter. The figure was a drastic gain in comparison to last year’s $191 million. Additionally, the firm reported a net income of $771 million during the first 2020 quarter in comparison to $32 million reported at the same time a year ago.
The astronomical rise has been influenced by both institutional and retail adoption. According to the company, it has over 56 million global customers. Out of which 6.1 million of them transact on a monthly basis. Forward, the firm estimates that it will capture 5.5 million to 9.0 million for 2021 depending on the cryptocurrency market nature.
The fall in COIN stock has also been attributed to Elon Musk’s tweets that have left cryptocurrency billionaires split regarding the environmental impact caused by the proof-of-work mining concept.