The crypto-mania continues to enthrall investors in 2021, as the price of Bitcoin touched record highs last week. Coinbase (NASDAQ:COIN) was also the first cryptocurrency platform that listed its shares publicly on a leading exchange.
Coinbase is a company valued at a market cap of $60 billion and is currently trading at a price of US$322 per share. It touched a record high of US$429.5 in intraday trading last week.
Coinbase is a market leader
Coinbase has over six million monthly transaction users and around US$233 billion worth of assets on its platform. This indicates it has a market share of 11.3% in the cryptocurrency trading segment. Coinbase derives a major portion of its revenue via trading fees that accounted for 96% of total sales in 2020.
Trading fees are directly proportional to the trading volume on the Coinbase platform. So, when Bitcoin prices move higher, trading fees will witness a significant uptick as investors will look to add digital assets to their portfolios. Alternatively, Coinbase will also experience a decline in revenue when markets turn bearish.
In Q1 of 2018, trading volume on Coinbase stood at US$56 billion. While Bitcoin prices declined by 90% in the next year, trading volume fell to just US$7 billion in the first quarter of 2019.
Coinbase expects revenue in Q1 of 2021 to rise by a stellar 844% to US$1.8 billion compared to US$191 million in the prior-year period. It has also forecast net income between US$730 million and US$800 million in Q1. Comparatively, Coinbase sales stood at US$1.3 billion in 2020 and in 2019 this figure was US$533.7 million. The company’s EBITDA also rose from US$24.3 million in 2019 to US$527 million in the last year. In Q1 of 2021, Coinbase has forecast EBITDA at US$1.1 billion, indicating a healthy margin of 60%.
Coinbase stock is expected to remain volatile in the near term, as investors try to make sense of its valuations. One of the biggest risks associated with Coinbase is the high fluctuations in Bitcoin and crypto prices. In fact, Bitcoin has lost over 90% in market value multiple times in the past, which will impact Coinbase sales as well. For example, cryptocurrency prices were down 60% in 2018. Comparatively, Coinbase sales fell 50% in this period.
Docebo stock is an ideal long-term bet
While the revenue of Coinbase is directly related to the cryptocurrency market, investors with a lower risk appetite can consider Docebo (TSX:DCBO)(NASDAQ:DCBO). This is an enterprise-facing, e-learning company that has outperformed broader markets since it went public back in 2019.
Docebo stock has returned 267% since its IPO. Despite its market-beating gains, the stock is trading 30% below its record high, giving investors an opportunity to buy a growth stock at a lower multiple.
Docebo continues to acquire clients at a fast clip, allowing it to grow its top line and trade at a steep valuation. Analysts expect Docebo revenue to grow by 48% to US$93 million in 2021 and by 35.6% to $US126 million in 2022. This will help the company narrow its earnings per loss from US$0.26 in 2020 to US$0.02 in 2022.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.