Some may describe Coinbase as the premier venue / business to buy or sell the most popular crypto currencies. It’s brand is widely known, culminating (and perhaps peaking) with an odd Super Bowl ad with a QR code bouncing across the screen:
Today, the world is a different place. In this case I refer to the risk-off nature of investors versus the heavy risk-on at all cost vibe of 2021. Businesses like these, namely those characterized by fad driven popularity, low predictability of key metrics, and high prices, aren’t in my wheelhouse in the slightest (LTM EPS: $14.50 / share, FY22E EPS: $0.69 / share). But I find it interesting and perhaps telling of the state of a broader swath of similar companies and assets. Here’s the stock since IPO:
But far more ominously, here are the companies bonds (~$3.75B in bonds outstanding on a market cap of $29B):
Note the two major bond issues trading in the 80s and 70s with implied yields north of 6%. I’m no bond expert – so there’s more to the situation than I understand, but at the very least, bonds trading this far off par isn’t necessarily normal. I’ll leave it there, as this is mostly to mark this point in time and take note of the conditions.
For reference, here is Jim Chanos’ short thesis on Coinbase, which isn’t necessarily indicative of anything – given he is short anything expensive and faddish:
Disclosure: We don’t own shares in Coinbase, this isn’t investment advice. Do your own work.