Shares of Coinbase (COIN) – Get Report, the world’s biggest cryptocurrency exchange, fell on Thursday, continuing a slide from last month’s initial public offering as investors question its valuation.
Coinbase recently traded at $257.98, down 5.5%. It has dropped 21% from its first day of trading April 14. It went public with a reference price of $250 in a direct listing.
The stock trades at 174 times earnings, 44 times sales, 19 times cash flow and 36 times book value, according to Morningstar. That’s not exactly a value stock.
The exchange’s fate is closely tied to bitcoin, the dominant cryptocurrency. Bitcoin has slid 10% in the past month, recently trading at $57,180, down 0.34%.
Many see the rise of cryptocurrencies, special purpose acquisition companies, or SPACs, and non-fungible tokens (NFTs) as major speculative bubbles, destined to pop.
While digital currencies likely have a major role in the markets, there’s no certainty as to their ultimate structure or whether an exchange will be needed to trade them.
Here’s a history of Coinbase from TheStreet.com.
On Tuesday, Mizuho Securities analyst Dan Dolev boosted his price target for the stock to $315 from $285 but said he was skeptical about the company’s medium-term prospects.
“We are most concerned with heavy reliance on retail trading commissions (80% of sales),” he said in a commentary
Coinbase said last month that it’s acquiring Skew, a data visualization and analytics platform for cryptocurrency markets. Terms weren’t disclosed. The deal is expected to close in this quarter.