The Crypto Crash Is a Disaster for Coinbase
For anyone who bought into the Coinbase (NASDAQ: COIN) IPO in April, it hasn't been a fun month. Shares of the cryptocurrency trading platform are now trading below their IPO price of $250, and they've been practically cut in half from their all-time high.
At first glance, the stock looks incredibly cheap. Coinbase reported revenue of $1.6 billion in the first quarter, up from just $179 million in the prior-year period. Net income surged to $771 million, up from just $32 million. At the current run rate, Coinbase trades for seven times sales and 15 times earnings.
But Coinbase stock isn't cheap because the business isn't sustainable. Coinbase earns revenue by charging fees to those trading cryptocurrencies on its platform. That's great when the prices of Bitcoin (CRYPTO: BTC) and other cryptocurrencies are soaring, but it's terrible in the aftermath of a market crash.
Source Fool.com
