Coinbase Global Inc.’s market for non-fungible tokens is finally here in what could be the key to revitalizing the crypto exchange’s growth prospects, a year after its public debut.
A trial version of its long-awaited platform – which was designed to sell ownership of digital art and possibly other items – was unveiled on Wednesday in the company’s latest effort to diversify its revenue and make the business more predictable. it was done.
When coinbase Going public a year ago, investors had high hopes for the growth story. But with sales growth expected to turn negative this year by triple digits in 2021, shares have hit record lows recently.
social NFT Marketplace — which will allow users to “like” and comment on images, similar to Instagram — will enter a crowded field six months after it was originally announced. Several other crypto exchanges and platforms, such as Binance and FTX, have already launched similar marketplaces. Also, the NFT propagation itself is cooling. Sales on OpenC, the world’s largest NFT marketplace, are down 67% in the last 30 days per tracker DappRadar.
Coinbase will need to hit the platform as it seeks to reduce its reliance on trading fees, which have been subject to the whims of retail traders, who have been on the sidelines recently after crypto prices fell from last year’s highs. are. At the end of last year, about 86% of Coinbase’s revenue came from trading fees. It has about 89 million registered users to whom it can promote the service.
Many believe that Coinbase will be able to expand into NFTs – but perhaps not as quickly as they expected last fall. According to Dan Dolev, managing director of Mizuho Securities, the platform may be “too little, too late”. “I don’t think it’s a big, promising thing,” he said.
first anniversary
Sentiment towards Coinbase stock has changed significantly since the company made its debut almost a year ago. As the largest US crypto exchange, its net revenue grew by over 500% in 2021. But it has been a rough ride since then as Coinbase’s challenges have piled up.
The company is facing increasing competition not only from crypto exchanges, but also from online brokerages such as Robinhood. Its grand India expansion plan – which CEO Brian Armstrong outlined in a recent visit to Bengaluru – went awry due to payment disruptions. And analysts are now forecasting a decline in adjusted revenue this year, according to data compiled by Bloomberg.
The stock is down about 50% since the end of its first day of trading, and while it has mostly moved in tandem with bitcoin prices, investors would be better off buying spot bitcoin. Shares fell 2.7% on Wednesday.
“Equity analysts do not believe that Coinbase will be able to generate any revenue outside of trading in any meaningful way,” Jeff Dorman, Arca Chief Investment Officer, said in an interview. They believe they are wrong. “It clearly doesn’t make sense where it’s worth right now. Basically, it’s the cheapest stock in the world.”
The NFT market has still grown significantly over the past year, and many believe that everything from house deeds to club memberships will become an NFT, creating a larger market. But hopes for Coinbase’s new NFT business have waned since it was first announced.
“I don’t think the waiting list will be as excited about NFTs as it was six months ago,” Chris Brendler, an analyst at DA Davidson, said in an interview. Coinbase has 2.5 million email addresses on its waiting list, although some of them may be duplicates.
looking ahead
Despite the challenges, Coinbase is investing heavily in its pursuit of growth. Its previous efforts to diversify revenue include its so-called staking products, which allow users to earn a yield on their coins. But in a recent investor letter, the company said it could slow down its investments if sales fell sharply so that losses this year do not exceed $500 million. Its enterprise arm is one of the most prolific in the industry, having struck nearly 150 deals last year.
During her earnings call in February, Alessia Haas, chief financial officer, said, “We’re not always going to be the first to market with a product.” “But once we see customer demand, we are going to rapidly follow through and make sure we can leverage the strengths of our platform.”