COIN remains a high-risk, high-reward stock
Coinbase Global Inc (NASDAQ:COIN) is down 0.5% to trade at $65.81 at last check, roughly one week before the cryptocurrency exchange platform's annual stockholder meeting on Wednesday, June 1. Shares have been testing a floor at their $60 level over the past week, after dropping to a May 12, all-time low of $40.83, but remain well below the 20-day moving average. Year-to-date, COIN has shed 73.5%.
Shorts have been piling on the equity of late. Short interest rose 54.7% in the last two reporting periods, and the 9.52 million shares sold short now account for 5.6% of the stock's available float.
The options pits are similarly bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.85 sits higher than 95% of annual readings. This means puts have been getting picked up at a much quicker-than-usual pace over the last two weeks.
Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.30 ranks in the 99th percentile of its 12-month range, indicating short-term options traders are now operating with a heavy put-bias.
The crypto stock offers a relatively low valuation at a price-earnings ratio of 6.73, and a price-sales ratio of 2.03, after Coinbase stock’s huge price drop. However, COIN has no forward price-earnings ratio, since the business is expected to report unprofitable years for 2022 and 2023.
Estimates have the company's EPS (earnings per share) decreasing 21.76 for 2022, down to -$7.26. For 2023, COIN is expected to increase earnings by $3.21, but remain unprofitable at an EPS of -$4.05. Plus, Coinbase is expected to end 2022 with a 41.4% drop in revenues. Still, the crypto exchange is expected to see a recovery in revenues in 2023, with 27.8% expected growth.
In addition, COIN maintains a strong balance sheet with $6.48 billion in cash, and $3.49 billion in total debt, which should help them weather the current storm. Coinbase stock still remains a high-risk, high-reward stock, offering an intriguing long-term opportunity as a speculative bet on the crypto market, and short-term as a recovery play.