Coinbase Makes Fortune 500 But Stock Lulls Around All-Time Lows

Key Insights:

• Coinbase enters the Fortune 500 list at number 437. 
• Inclusion was based on 2021 revenue of $7.8 billion.
• COIN has dumped a further 7% on the day as it heads back to its lowest levels.

Coinbase Global has become the first crypto company to break into the Fortune 500, as announced this week. Under normal circumstances, this would have been bullish news for the crypto industry, but as Fortune reported on May 25 in its usual FUD-fuelled (fear, uncertainty, and doubt) manner, it happened “just in time for crypto winter.”

The San Francisco-based firm has entered the illustrious list at 437 despite having a disappointing Q1 revenue report which saw it make a loss.

The inclusion on Fortune’s list of the biggest U.S. companies came on the back of stellar performance and profits during the crypto bull market of 2021. Last year, Coinbase made $7.8 billion in revenue, which is above the minimum of $6.4 billion that firms need to be considered for the Fortune 500.

Coinbase Highs and Lows

Coinbase, which went public in the United States in April 2021, closed its first trading day with a $61 billion valuation. This enabled the firm to become the seventh-highest market cap among U.S. companies after their first trading day.

2022 has not been so easy on Coinbase, as crypto markets have slumped 43% since the beginning of the year. This equates to a whopping $1 trillion leaving the space as another bear market cycle unfolds. To put this into perspective, crypto markets have lost the equivalent of their total market capitalization in January 2021.

Coinbase derives more than 85% of its revenue from trading fees, which are among the highest in the industry. Lower trading volumes amid this crypto slump have resulted in lower than expected revenues for the company, which has been reflected in the stock price performance.

Coinbase missed analyst expectations for the first quarter. Its underwhelming net revenue of $1.16 billion resulted in a net loss of $430 million for January to March this year, and Q2 could be even worse. Coinbase revenue declined 53% from Q4, 2021 when most crypto assets hit their highest prices.

Further falls in revenue could see Coinbase drop out of that prestigious list this year, added Fortune. A crypto winter like the one that started in early 2018 and lasted a year and a half could easily have that effect.

However, analysts have suggested that new products signal a strategic shift for the firm. Coinbase recently announced plans to expand Coinbase Pay, develop an institutional staking protocol, and native decentralized app support within its platform as it aims to become an embedded service provider for the decentralized economy.

COIN in The Doldrums

Coinbase stock [COIN] dropped 7.1% on Tuesday to end the day at $61.36 during after-hours trading. Since the beginning of the year, COIN has dumped 75% to current levels, which are only just above its May 11 all-time low of $52.55, according to FXEmpire.