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May 26, 2021, 6:42 a.m. EDT

What is Wrong with Coinbase?

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    Coinbase Global Inc. (COIN)
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May 26, 2021 (Baystreet.ca via COMTEX) -- After debuting on the markets and trading as high as $429.54, Coinbase /zigman2/quotes/225893452/composite COIN -0.51% is off sharply. The post-IPO blues are expected. The cryptocurrency exchange site's problem is volatility.

Price volatility with cryptocurrency should drive trading volumes higher on Coinbase. Unfortunately, the company, once worth around $100 billion, cannot handle the transaction requests. Last week, the site crashed often. Every downtime will cost the company uncollected fees.

The stock valuations are unfavorable, too. Trading at over 30 times price-to-sales, Coinbase does not guarantee the same pace of growth over the next five years. Investors could buy crypto miners like Mara Digital /zigman2/quotes/205886758/composite MARA -2.45% or Riot Blockchain /zigman2/quotes/209538617/composite RIOT -2.67% , too. RIOT has a short interest of around 18%. A short-squeeze is a positive catalyst for RIOT stock. By comparison, COIN stock is at the mercy of bitcoin's price.

When Tesla's /zigman2/quotes/203558040/composite TSLA -0.91% CEO, Elon Musk, derided bitcoin for its cost on the environment, the coin plunged. Other cryptos followed. The instability of the currency undermines Coinbases's long-term prospects. The sharp correction in bitcoin is nothing new. At every turn downward, bitcoin rebounded. As a means of exchange, the volatility will undermine the legitimate use.

Investors should watch COIN stock for now. The stock's upside depends on stability in the underlying cryptocurrency market.

COMTEX_387313550/2559/2021-05-26T06:42:23

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

/zigman2/quotes/225893452/composite
US : U.S.: Nasdaq
$ 224.92
-1.16 -0.51%
Volume: 1.57M
July 23, 2021 4:00p
P/E Ratio
77.44
Dividend Yield
N/A
Market Cap
$47.30 billion
Rev. per Employee
$1.02M
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/zigman2/quotes/205886758/composite
US : U.S.: Nasdaq
$ 24.64
-0.62 -2.45%
Volume: 5.33M
July 23, 2021 4:00p
P/E Ratio
43.12
Dividend Yield
N/A
Market Cap
$2.45 billion
Rev. per Employee
$1.45M
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/zigman2/quotes/209538617/composite
US : U.S.: Nasdaq
$ 28.10
-0.77 -2.67%
Volume: 7.64M
July 23, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.70 billion
Rev. per Employee
$1.51M
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 643.38
-5.88 -0.91%
Volume: 14.60M
July 23, 2021 4:00p
P/E Ratio
643.96
Dividend Yield
N/A
Market Cap
$619.79 billion
Rev. per Employee
$445,694
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