No matter the sector or industry, top-tier growth stocks all share the same fundamental attributes. From Tesla to Netflix to Adobe, these companies are able to expand their businesses, retain a slew of competitive advantages, and capitalize on paradigm-shifting trends.
After less than a year on the public markets, Coinbase is already posting some huge growth figures, but rather than sky rocketing, shares of Coinbase have been tumbling. So what gives? Let's figure out why Coinbase stock is struggling, and whether it is becoming both a growth stock and a value winner.
Coinbase has garnered interest from the CEO of Ark Invest. According to a database called Cathie's Ark, The investment firm's suite of funds has a combined interest of 5.95 million shares of Coinbase, worth $1.46 billion as of this writing. Making up 3.4% of total assets under management, Coinbase has become one of Ark's largest holds.
Despite the fact Coinbase is now earning much more revenue and net income than it did in 2020, its trailing twelve-month (TTM) financial metrics put the stock in value territory. Its price-to-sales (P/S) ratio is 12, which is high even for most growth stocks, but what separates Coinbase from others is its ability to rake in a ton of profit. Simply dividing the market cap of Coinbase by its TTM net income would give it a price to earnings (P/E) ratio of around 20. However, due to share dilution, Coinbase's diluted P/E ratio is closer to 23, and its price-to-EBITDA ratio is similar. Simply put, the stock is inexpensive, especially once you consider the S&P 500 has a P/E ratio of over 30.
As the leader in a growing space, there's reason to believe Coinbase can make up for a margin shortfall by adding more products and services, growing its AOP, and benefiting from a huge addressable market. All stocks have their risks. The good thing about Coinbase is that its risks are fairly out in the open. For investors willing to take them on, Coinbase looks like a great buy, so get loading up Now.