Over the past six months, Coinbase has been a great trade. While the S&P 500 was flat, the stock price has climbed by 12% to $181.97 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is it too late to buy COIN? Find out in our full research report, it’s free.
Regarded by many as the face of crypto, Coinbase (NASDAQ:COIN) is a digital exchange helping the world onboard into the blockchain ecosystem.
Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns in fees from each user. ARPU also gives us unique insights into the average transaction size on Coinbase’s platform and the company’s take rate, or «cut», on each transaction.
Coinbase’s ARPU growth has been exceptional over the last two years, averaging 58%. Although its monthly transacting users shrank during this time, the company’s ability to successfully increase monetization demonstrates its platform’s value for existing users.
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Coinbase’s EPS grew at an astounding 140% compounded annual growth rate over the last five years, higher than its 65.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Coinbase has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the consumer internet sector, averaging an eye-popping 36% over the last two years.
These are just a few reasons why Coinbase is one of the best consumer internet companies out there, and with its shares topping the market in recent months, the stock trades at 16.6× forward EV-to-EBITDA (or $181.97 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run – and we’re laser-focused on finding the best stocks for this upcoming cycle.
