Coinbase shares plunge to all-time low despite NFT market beta launchKiana Griffin
Two days after the beta launch of the new NFT trading platform, Coinbase shares fell to an all-time low during Friday’s trading session.
The company announced plans to enter the NFT sector back in October last year, and more than 1.5 million people signed up for the waiting list. The Coinbase NFT beta was launched on April 20th.
Meanwhile, according to Yahoo! Finance, Coinbase stock has been steadily declining since the beginning of the month and the launch of the beta this week has not changed that trajectory. On Friday, COIN hit a low of $131.25 before closing at $131.52.
While anyone can access the website for now, with the launch of the beta, only a select few customers can buy and sell Ethereum-based NFTs with payments in ETH. In the future, the company plans to integrate other blockchains, as well as add some unique features that will provide users with more ways to interact.
John Todaro , senior analyst at Needham & Company, said the real question is whether the NFT market will succeed. Everyone had known for months that this would happen.
“Investors are now asking, ‘Can you really scale it, can it scale up, can it really compete with Open Sea?’ – he said. It will really increase revenue, and not just start up and maybe fizzle out.”
Coinbase faces competition not only from OpenSea and LooksRare, which dominate the market, but also from major crypto exchanges FTX.US and Binance, which also launched NFT trading platforms last year.
Todaro said that Needham & Company released a note saying that once the Coinbase NFT market starts scaling, it will be able to increase revenue very gradually.
“We remain bullish on Coinbase shares, we think they are fundamentally very attractive,” he said. If they can scale the NFT marketplace, I think it will really increase the stock.”
In a report published in February, JMP Group also indicated that Coinbase could benefit from the NFT market in the long term.
“The company is investing in a number of areas that may not have such an immediate impact, but should make a significant contribution to long-term earnings, including its future NFT platform,” the report said.
Jeff Dorman , co-founder and chief investment officer of crypto asset management company Arca, also said that it is too early for the Coinbase NFT market to prove its value to investors.
“Since NFTs in general are still not widely adopted and accepted by TradFi, we think you will need to see real support for many quarters before any equity analysts give Coinbase credit for this,” he said.
According to Dorman, “Coinbase’s multiplier is lower than expected,” due in part to the expectation that their trading fees will continue to decline. The downturn in retail has increased additional pressure, he said.
“Until Coinbase’s subscription and services businesses make up the majority of their revenue, Coinbase will continue to suffer from a low volume/low retail environment,” Dorman said.
Todaro said Coinbase stock performance over the past few months also reflected broader market trends. He noted that interest rates have affected tech stocks in general, and retail cryptocurrency trading volumes in particular, which have also declined.
“Therefore, investors are also trying to understand if we are in a new environment here, where the cryptocurrency retail activity is much lower than in 2021,” he said.