Pretty tough to eat appreciation; meanwhile Coca-Cola (and all those other old, boring companies) pays ~ 3.5% dividends annually. I'm sick of companies using my money for free to only fund their own growth.
This is why stock buybacks are better in some ways than dividends for returning money to shareholders.
This seems obvious, but I’m not sure it’s the case anymore.
DeFi has been growing, although hampered by ethereum right now, could eventually consume much of Coinbase’s income stream.
They may need to pivot to more of a banking role as ethereum solves tx fees and DeFi grows on L2. Whether that means more or less profit is not clear. I have a theory this IPO is really a calculated approach to facing such a reality, while they’re still considered untouchable.
A successful model for Coinbase at this point is probably what Google does: let others innovate, clone the ideas once they start becoming popular, keep them under an umbrella and provide easy integration/movement among them.
edit meaning that you at least wouldn't want that to be exclusively true
Bitcoin futures are available since 2017 on CME and CBOE.
Because of their big purchases Microstrategy stock (MSTR) tracks Bitcoin pretty well.
$MARA and $RIOT are publicly traded companies in the US that professionally mine for Bitcoin. Their stocks ride the same wave as that of Bitcoin.
Not sure of how it applies but there it is.
One way I could see this going: the smallest unit of a Bitcoin is a Satoshi. What happens when that value is greater than a transaction base cost?
Right now it’s $0.0005 or 100 millionth the cost of a coin. This implies a lot of runway.
In other words, off chain transactions are a potential solution.
We did, but blockchain tech rallying on the bitcoin price is a little like paper producers rallying on a baseball card fad. But markets are irrational, so...
There are a few in Europe look up Exchange Traded Products.
If the price went up, the sellers also know this and will adjust their offers though, so you won't be able to buy underpriced BTCC shares in the morning. You can bid at the previous day's closing price but good luck getting your bid filled.
$GBTC Grayscale Bitcoin Trust
Secondly, Coinbase doesn’t allow any secondary transactions, this was a company sponsored (approved) secondary. As a result this created immense scarcity so you can see how much the price changes just in these limited sales.
Third, as we saw with the last bull run of Bitcoin everything with blockchain in the name had a halo effect so there is definitely upward momentum.
Fourth, there is no Bitcoin tracking security on public markets. Obviously if Bitcoin succeeds so does Coinbase, this is an Avenue to get exposure to that without having to invest in Bitcoin directly and since Coinbase makes money on volatility which Bitcoin has a tremendous amount you get to ride the swings up and down by investing in Coinbase and not having exposure to Bitcoin directly. Investing in the shovels not the gold.
Eventually companies grow in to their valuations and that is determined by supply and demand and ultimately revenue and profits. Coinbase is still growing rapidly and profitable so in today’s market there will be a huge premium for that.
Technically it most closely resembles zoom from a financial perspective and from a capturing the trends perspective so while the valuation may seem high if Coinbase isn’t worth this then neither is zoom.
When will there be a market correction it’s impossible to know. We could have said the same thing for the post two years and it still hasn’t happened.
Don’t forget that getting yield outside of stocks is increasingly difficult and while we are on HN trapped in the echo chamber of tech and tech stocks when you look at the old staples like Coca-Cola they haven’t appreciated during this time.
Large mutual funds could be rebalancing their portfolios to move more into tech which they should have done from 2010 onwards but largely resisted outside of FAANG stocks.
The only thing that is certain is that this is a wild ride.