Coinbase Global (COIN), mcap=$17.7bn, price $63 vs $133

Pitch: Largest crypto exchange in the US. Over-earning, steadily losing share to new entrants, and with ballooning customer acquisition costs (+470% yoy). Fees from retail trades expected to compress from the current 1.2% to 0.1-0.5% charged by competitors. Due to operating leverage, the decline in retail volume/users will have a disproportionate effect on the bottom line.

Valuation: Trades at 19x 2022 EBITDA & 4.3x 2022 sales. Author’s 2023 estimates imply rev 20% below and EBITDA 30% below consensus. At 13x EBITDA it’s $90/share stock.

Exp. gain: 33% to $90/share

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